2. Identify the relevance of each of the figures given in the exercise in terms of making the special-order decision.
2. Identify the relevance of each of the figures given in the exercise in terms of making the special-order decision.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Che
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Intercontinental's special order requires 1,400 kilograms of genatope, a solid chemical regularly used in the company's
products. The current stock of genatope is 9,600 kilograms at a book value of 8.40 p per kilogram. If the special order is
accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of 9.00 p per kilogram.
Without the special order, the purchasing manager predicts that the price will be 8.60 p when normal restocking takes
place. Any order of genatope must be in the amount of 5,000 kilograms.
2. Identify the relevance of each of the figures given in the exercise in terms of making the special-order decision.
(a) Book value of inventory
(b) Quantity to be used in the special order
(c) Predicted cost if next order is placed early
(d) Predicted cost if next order is placed on time
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Transcribed Image Text:Che
Required information
[The following information applies to the questions displayed below.]
Intercontinental's special order requires 1,400 kilograms of genatope, a solid chemical regularly used in the company's
products. The current stock of genatope is 9,600 kilograms at a book value of 8.40 p per kilogram. If the special order is
accepted, the firm will be forced to restock genatope earlier than expected, at a predicted cost of 9.00 p per kilogram.
Without the special order, the purchasing manager predicts that the price will be 8.60 p when normal restocking takes
place. Any order of genatope must be in the amount of 5,000 kilograms.
2. Identify the relevance of each of the figures given in the exercise in terms of making the special-order decision.
(a) Book value of inventory
(b) Quantity to be used in the special order
(c) Predicted cost if next order is placed early
(d) Predicted cost if next order is placed on time
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