Why are only "relevant" costs used when analyzing a Special Order?
Why are only "relevant" costs used when analyzing a Special Order?
Homework Answers
Relevant cost are those which cost that will be incurred because of special order. Usually relevant cost will be variable cost of production and specific fixed cost if any for the execution of special order.
Since these above costs are incurred because of special order, those becomes relevant for decision making of special order.
Other fixed cost which will exist or incur irrespective of special order executed or not, which will be called usually as irrelevant cost.
So only relevant cost are considered for analysing special order.
Why do you think it is important to only consider only relevant costs when conducting a...
Why do you think it is important to only consider only relevant costs when conducting a differential analysis? Why not consider all possible costs in your decision. Be sure to provide examples to back up your ideas. TOPIC: Differential Analysis
Opportunity costs are relevant to which of the following decisions? Whether to accept a special order...
Opportunity costs are relevant to which of the following decisions? Whether to accept a special order when capacity limited no Whether to make or buy a product yes no no no yes yes yes O no, yes O no, no yes, no yes, yes
Exercise 14-36 Special Order (LO 14-4, 14-5) [The following information applies to the questions displayed below.)...
Exercise 14-36 Special Order (LO 14-4, 14-5) [The following information applies to the questions displayed below.) Intercontinental Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it does not normally produce. Since the company has excess production capacity management is considering accepting the order. In analyzing the decision, the assistant controller is compiling the relevant costs of producing the order Production of the special order would require 8.200 kilograms of theolite. Intercontinental does not use...
What are relevant and irrelevant costs, and how are they used in differential analysis? Why are...
What are relevant and irrelevant costs, and how are they used in differential analysis? Why are sunk costs irrelevant when making a decision?
Question C.1 (12 Marks) Define relevant costs. Why are historical costs irrelevant? a. b. Distinguish between quantitative and qualitative factors in decision making. Why are qualitative factors...
Question C.1 (12 Marks) Define relevant costs. Why are historical costs irrelevant? a. b. Distinguish between quantitative and qualitative factors in decision making. Why are qualitative factors important in decision making? Sunny Inc. produces 40 000 MP3 Players each month. The market price per MP3 Player is $40. The following data is relevant to MP3 Players' production and sales in November 2018 c. Direct material costs S389 870 Direct labor costs S265 900 Variable manufacturing overhead costs S224 230 Variable...
Which factor is not relevant in deciding whether or not to accept a special order? Incremental...
Which factor is not relevant in deciding whether or not to accept a special order? Incremental revenue that will be earned Additional costs that will be incurred The effect that the order will have on the company's regular sales volume and selling prices The average cost of production if the special order is accepted
Which of the following is not relevant in a special order decision? Group of answer choices...
Which of the following is not relevant in a special order decision? Group of answer choices Variable costs. Opportunity costs. Sunk costs. Avoidable fixed costs. None of the answer choices is correct.
Intercontinental Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it...
Intercontinental Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it does not normally produce. Since the company has excess production capacity, management is considering accepting the order. In analyzing the decision, the assistant controller is compiling the relevant costs of producing the order. Production of the special order would require 8,700 kilograms of theolite. Intercontinental does not use theolite for its regular product, but the firm has 8,700 kilograms of the chemical on hand...
Answer these following questions: 1. Only variable costs can be relevant or differential cost A. True...
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....
Which of the following would be considered a relevant fixed cost in making a special order...
Which of the following would be considered a relevant fixed cost in making a special order decision? Unavoidable fixed costs associated with current business. Contribution margin of any current business replaced. Depreciation on existing production equipment. Incremental fixed costs associated with the order.
Opportunity costs are relevant to which of the following decisions? Whether to accept a special order when capacity limited no Whether to make or buy a product yes no no no yes yes yes O no, yes O no, no yes, no yes, yes
Exercise 14-36 Special Order (LO 14-4, 14-5) [The following information applies to the questions displayed below.) Intercontinental Chemical Company, located in Buenos Aires, Argentina, recently received an order for a product it does not normally produce. Since the company has excess production capacity management is considering accepting the order. In analyzing the decision, the assistant controller is compiling the relevant costs of producing the order Production of the special order would require 8.200 kilograms of theolite. Intercontinental does not use...
Question C.1 (12 Marks) Define relevant costs. Why are historical costs irrelevant? a. b. Distinguish between quantitative and qualitative factors in decision making. Why are qualitative factors important in decision making? Sunny Inc. produces 40 000 MP3 Players each month. The market price per MP3 Player is $40. The following data is relevant to MP3 Players' production and sales in November 2018 c. Direct material costs S389 870 Direct labor costs S265 900 Variable manufacturing overhead costs S224 230 Variable...
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....
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