In differential cost analysis in the context of "Special Pricing, consideration is given to "Sunk Cost" (True or False?)
False .
Under Differntial cost , consideration is given to only relevant cost , ie that cost which affect the decision between two alternative
Relevant cost are the cost that differ between two alternative . Suppose cost of making or buying , if we buy from outside , relevant cost will be variable cost of making becuase this cost are avoidable when be buy product directly from outside . Opportunity cost is also relevant cost ie from above example if from buying from the externala market it is assume that the machinery can be rented then the rental income will be the opportunit cost that will gone if we continue making the product.
Whereas Sunk cost are irrelevant cost , it is the cost that are already incurred and will not change the decision between two alternative . Sunk cost is always irrelevant cost.
In differential cost analysis in the context of "Special Pricing, consideration is given to "Sunk Cost"...
In a "Differential Analysis, whether in the context of "Special Pricing", "Make-It or Buy-It" or "Add or Drop a Product", what is the most important consideration?: a) The total costs of the alternative b) The total revenues from the alternative c) Whether the alternative yields a positive contribution margin d) The total fixed costs of the alternative
(4pts) 19) Differential analysis is an approach to the analysis of relevant costs that focuses on the costs that differ under alternative actions. True O False (4pts) 20) Which of the following statements about sunk costs is true? Sunk costs are the result of past decisions. Sunk costs are never relevant to decisions. Sunk costs do not vary between decision alternatives. All of the above. 21) The point in the production process where joint products become separately identifiable is (4pts)...
Answer these following questions: 1. Only variable costs can be relevant or differential cost A. True B. False 2. Fixed Costs which change with a decisions are relevant A. True B. False 3. Sunk costs are always relevant to decisions A. True B. False 4. In incremental analysis, total fixed costs will always remain constant A. True B. False 5. A special order should not be accepted if the sales price is less than the unit variable cost. A. B....
The decision to make "Special Pricing" decision is made under "Long-Run" planning period (True or False?)
The cost of an action is measured in terms of the foregone activity called sunk costs. Group of answer choices True False
In deciding whether to accept a special pricing order, management should only consider the quantitative data and disregard qualitative factors. O O True False
( I ONLY NEED TO KNOW WHAT THE SUNK COST IS) A company is considering replacing an old piece of machinery, which cost $602,300 and has $353,000 of accumulated depreciation to date, with a new machine that has a purchase price of $487,000. The old machine could be sold for $63,300. The annual variable production costs associated with the old machine are estimated to be $156,100 per year for eight years. The annual variable production costs for the new machine...
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