If a factory is operating below max capacity and receives a one-time opportunity to accept an order at a special price below the usual price (Special Order Decision), which of the following statements is applicable: O the order will always be rejected the order will always be accepted O only fixed costs will be relevant Donly variable costs will be relevant

If a factory is operating below max capacity and receives a one-time opportunity to accept an order at a special price below the usual price (Special Order Decision), which of the following statements is applicable: O the order will always be rejected the order will always be accepted O only fixed costs will be relevant Donly variable costs will be relevant

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 8MCQ: In a make-or-buy decision, a. the company must choose between expanding or dropping a product line....

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Which of the following statements about the use of relevant cost analysis in decision making is true? O Future costs that do not differ between the alternatives may or may not be relevant in a decision. O Per-unit variable costs are always differential costs. O A production cost incurred before the split-off point in a joint process is relevant in a sell as-is or process further decision. O If a special order decision requires the use of capacity that is not idle, opportunity costs are zero.
In a make-or-buy decision, a. the company must choose between expanding or dropping a product line. b. the company must choose between accepting or rejecting a special order. c. the company would consider the purchase price of the externally provided good to be relevant. d. the company would consider all fixed overhead to be irrelevant. e. None of these.
Management is considering a one-time-only special order. There is sufficient idle capacity to fill the order without affecting any normal sales. Which one of the following is NOT relevant in making the decision? Sunk costs Variable costs Fixed costs Differential costs
assi C rrat Which of the following is not a factor to consider when deciding whether to accept a special order? Select one: O A. Whether this order will hurt the brand name of the company B. Whether the offered price is sufficient to cover prime costs and fixed overhead allocated C. Whether other potential orders would be more profitable D. Whether additional fixed costs would need to be incurred E. All of the above
When deciding to accept a special order, which of the following costs are relevant? A. Fixed production costs (no), normal selling price (yes) B. Fixed production costs (no), normal selling price (no) C. Fixed production costs (yes), normal selling price (yes) D. Fixed production costs (yes), normal selling price (no)
Which one of the following statement is not correct? O Both fixed and variable costs influence short-term decision-making. O Short-term decision-making is all about analysing those costs that will change as a result of taking a particular action. O Opportunity costs are only considered when resources are limited. O Break-even analysis is used to determine how many units of a product or a service a business has to sell to cover all its costs.
If Mazoon Company sells unit outputs that exceed the breakeven point there will be a profit .a O total sales revenue will exceed total variable costs b O None of the given answers .c O there will be an increase in total fixed costs .d O total sales revenue will exceed total fixed costs .e O
1.Which of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity? Group of answer choices Net income will increase if the special sales price per unit exceeds the unit variable costs. Net income will not be affected. Additional fixed costs will probably be incurred. Net income will decrease.
If Mazoon Company sells unit outputs below the breakeven point_ a. there will be a loss b. total sales revenue will be less than total fixed costs O c. None of the given answers O d. there will be an decrease in total fixed costs e. total sales revenue will be less than total variable costs rch hp 144 A 6. 8 9. G K
2. Which of the following statements is false? (You may select more than one answer.)a. The planning horizon for discretionary fixed costs is longer than the planninghorizon for committed fixed costs.b. Discretionary fixed costs can be cut in the short term if necessary, while committed fixed costs cannot be cut for short periods of time.c. As companies increasingly rely on knowledge workers, the labor cost associated withemploying these workers is often committed fixed as opposed to discretionary.d. A mixed cost contains both committed fixed and discretionary elements.
Which of the following best describes a fixed cost? A. It may only change in total when such change is unrelated to changes in production volume (i.e. inflation). B. It may change in total when such change is related to changes in production volume. C. It is constant per unit of change in production volume. D. It may change in total when such change depends on production volume within the relevant range. QUESTION 2 Period costs are best described as those costs: A. Incurred periodically (i.e. not on a regular basis). B. Incurred as a result of activities that occur inside the production building. C. That increase as a result of a change in volume for a particular period. D. Incurred as a result of activities that occur outside of the production building. QUESTION 3 What is the result when the contribution margin ratio increases? A. Break-even point increases B. Fixed Cost…
If a firm is at full capacity, the minimum special order price must cover O A. O B. O C. O D. variable costs associated with the special order. variable and incremental fixed costs associated with the special order. variable and fixed manufacturing costs associated with the special order. variable costs and incremental fixed costs associated with the special order plus foregone contribution margin on regular units not produced.