When should a special order should be accepted?
The rule is to accept the order if benefits exceed costs. When the company is operating at less than its maximum capacity and the company has enough capacity to produce and fill the special order, the order should be accepted if the additional sales exceed the additional variable costs.
Which factor is not relevant in deciding whether or not to accept a special order?
The average cost of production if order is accepted is not the relevant factor in deciding the special order.
Which type of company converts raw materials into finished products?
manufacturing company
What are the 3 general orders?
“I will guard everything within the limits of my post and quit my post only when properly relieved.” “I will obey my special orders and perform all of my duties in a military manner.”
What is the constant under high-low method?
The high-low method is a simple way to segregate costs with minimal information. The simplicity of the approach assumes the variable and fixed costs as constant, which doesn’t replicate reality
When the high-low method is used to estimate a cost function the variable cost per unit is found by?
3. When the high-low method is used to estimate a cost function, the variable cost per unit is found by a. performing regression analysis on the associated cost and cost driver database.
What is raw materials and finished products?
A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished products, energy, or intermediate materials that are feedstock for future finished products.
When evaluating a special order management should?
When evaluating a special order, management should: Only accept the order if the incremental revenue exceeds all product costs. Only accept the order if the incremental revenue exceeds fixed product costs. Only accept the order if the incremental revenue exceeds total variable product costs.
What does logically organized mean?
Basically, learners organize written pieces in a way that gives meaning. In this case, the functional organization of sentences in paragraphs helps readers to follow the development of thoughts. Hence, a logical order is the organization of ideas from general to specific, which enhances the overall quality of papers.
What is meant by special pricing decisions?
Special order pricing is a technique used to calculate the lowest price of a product or service at which a special order may be accepted and below which a special order should be rejected. Usually a business receives special orders from customers at a price lower than normal
Which product simple or advanced is most profitable for Nicholas Inc to manufacture?
The opportunity cost of holding inventory is the income forgone by tying up money in inventory and not investing it elsewhere. Which product, Simple or Advanced, is most profitable for Nicholas, Inc. to manufacture? Simple provides a higher contribution margin per pound of scarce raw material.
When deciding whether to accept a special order should we compare the extra revenues we will receive?
When deciding whether to accept a special order, we should compare the extra revenues we will receive against the extra costs we will incur to fill the order. Costs that we will incur whether or not we fill the order are irrelevant to our decision.
How are special orders calculated?
Calculate the contribution margin (price – variable costs) per unit for the special order. Exclude irrelevant costs from the calculation. Multiply the number of units in the special order by the contribution margin per unit. If there are any incremental fixed costs, subtract those costs from the contribution margin.
What is the process of making a raw material into a finished product?
Manufacturing is the process of turning raw materials or parts into finished goods through the use of tools, human labor, machinery, and chemical processing. Before the Industrial Revolution, most products were handmade using human labor and basic tools