Which of the following is correct with regard to short-term decision making? A. If a company...
Which of the following is correct with regard to short-term decision making?
A. If a company has insufficient excess capacity to fully fill a special order, the company will need to give up regular sales if they accept the special order.
B. The effect on current and future customer relationships should not be considered when deciding whether to accept or reject a special order.
C. When a manufacturer outsources production of a part used in its production process, the manufacturer will typically eliminate all fixed manufacturing costs.
D. A company having few competitors would typically use target costing in its pricing approach.
E. In a keep/drop decision, if all of a company’s fixed costs are common, a segment’s segment margin will be less than its contribution margin.
Homework Answers
Which of the following is correct with regard to short - term decision making?
Answer
A. If a company has insufficient excess capacity to fully fill a special order, the company will need to give up regular sales if they accept the special order. This is correct with regard to short - term decision making.
Option
B : The effect on current and future customer relationships should not be considered when deciding wheather to accept or reject a special order.
It is wrong. Of course effect on current and future relationships should be considered when deciding wheather to accept or reject a special order.
C : When a manufacturer outsource production of a part used in its production process,the manufacturer will typically eleiminate all manufacturing costs.
It is wrong. All manufacturing costs can not be eliminated by outsourcing part used in its production.
D :A company having few competitors would typically use target costing in its pricing approach.
This statement is not correct with regards to short term decison making.
E. In a keep/drop decison, if all of a company's fixed costs are common, a segment's segment margin will be less than its contribution margin.
It is wrong.This statemnt is again wrong with regard to contribution margin.
Add Answer to:
Which of the following is correct with regard to short-term
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Based on annual production costs for 12,000 units of product,
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Adams has excess capacity and receives a special order for 5,000
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Business Decision Case The following total cost data are for Ralston Manufacturing Company, which has a...
Business Decision Case The following total cost data are
for Ralston Manufacturing Company,
which has a normal capacity per period of 400,000 units
of product that sell for $18 each. For the
foreseeable future, regular sales volume should continue
at normal capacity of production
Solution 6.1
y-intercept 5 Total fixed costs of $5.000
Slope 5 Variable cost per unit of approximately $0.50
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Total cost 5 ($0.50 3 # of water bottle cages) 1
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$25,000 5...
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** Please show work and formulas Business Decision Case The following total cost data are for...
** Please show work and formulas
Business Decision Case The following total cost data are for Ralston Manufacturing Company, which has a normal capacity per period of 400,000 units of product that sell for $18 each. For the foreseeable future, regular sales volume should continue at normal capacity of production. Direct materials. ........................ Direct labor. . . . . . . . . . Variable overhead .......... Fixed overhead (Note 1)......... Selling expense (Note 2) ....... Administrative expense (fixed) $1,720,000...
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Adams Company, which produces and sells a small digital clock,
bases its pricing strategy on a 25 percent markup on total cost.
Based on annual production costs for 12,000 units of product,
computations for the sales price per clock follow:
Adams has excess capacity and receives a special order for 5,000
clocks for $22 each. Calculate the contribution margin per unit.
Based on this, should Adams accept the special order?
Prepare a contribution margin income statement for the special
order....
Benson Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual production costs for 10,000 units of product, computations for the sales price per clock follow: $150,000 50,000 Unit-level costs Fixed costs Total cost (a) Markup (a x 0.25) Total sales (b) 200,000 50,000 $250,000 25 Sales price per unit (b 10,000) Required a. Benson has excess capacity and receives a special order for 7,000 clocks...
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for Ralston Manufacturing Company,
which has a normal capacity per period of 400,000 units
of product that sell for $18 each. For the
foreseeable future, regular sales volume should continue
at normal capacity of production
Solution 6.1
y-intercept 5 Total fixed costs of $5.000
Slope 5 Variable cost per unit of approximately $0.50
per water bottle cage
Total cost 5 ($0.50 3 # of water bottle cages) 1
$5,000
$25,000 5...
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** Please show work and formulas
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