1. A company has already incurred a $1,000 cost in partially producing its four products. Their selling prices when partially and fully processed follow with additional costs necessary to finish these partially processed units:

Product

Unfinished
Selling Price

Finished
Selling Price

Further
Processing Costs

Alpha       

$300

$600

$150

Beta        

450

900

300

Gamma     

275

425

125

Delta       

150

210

75

Which product(s) should not be processed further, (a) Alpha, (b) Beta, (c) Gamma, or (d) Delta?

2. Under what conditions is a sunk cost relevant to decision making?

3. What is the difference between avoidable and unavoidable expenses?

4. A segment is a candidate for elimination if (a) its revenues are less than its avoidable expenses, (b) it has a net loss, (c) its unavoidable expenses are higher than its revenues.