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(Solved) 9. Derek is performing incremental analysis in a make- or-buy decision for Item X. If Derek buys...


9.   Derek is performing incremental analysis in a make- or-buy decision for Item X. If Derek buys Item X, he can use its released productive capacity to produce Item Z. Derek will sell Item Z for $12,000 and incur production costs of $8,000. Derek’s incremental analysis should include an opportunity cost of:   (a) $12,000. (b) $8,000. (c) $4,000. (d) $0. 10.   The decision rule in a sell-or-process-further decision is: process further as long as the incremental revenue from processing exceeds: (a)   incremental processing costs. (b)   variable processing costs. (c)    fixed processing costs. (d)   No correct answer is given.  

 


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