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Fall 2020 ACCT 3122 Test 1 Question 1 (10 Marks) Ahmed owns Ahmed Manufacturing LLC...

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Fall 2020 ACCT 3122 Test 1 Question 1 (10 Marks) Ahmed owns Ahmed Manufacturing LLC based in Muscat. In deciding on several important business-related decisions, he has to deal with the following independent scenarios/statements: All future costs are irrelevant in decision making m) A sunk cost is a cost that has already been incurred but that can be avoided at least in part depending on the action a manager takes. (i) If a firm uses Machine hours as the allocation base and that it has low skilled laborers, a special order caused unplanned overtime. These could create UNFAVORABLE Fixed overhead Spending Variance (iv) In a decision to drop a segment, the opportunity cost of the space occupied by the segment would be the profit that could be derived from the best alterative use of the space. ~ The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is the product's contribution margin. For each of the scenario/statement to (V) above, STATE your agreement OR disagreement and (10 Marks) provide appropriate EXPLANATION(S) / JUSTIFICATION(S)

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