FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Required Information
EX 14-37 (Algo) Special Order (LO 14-4, 14-5)
[The following information applies to the questions displayed below.]
Intercontinental's special order requires 1,700 kilograms of genatope, a solid
chemical regularly used in the company's products. The current stock of
genatope is 9,200 kilograms at a book value of 8.70 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 9.30 p per kilogram. Without the special
order, the purchasing manager predicts that the price will be 8.90 p when
normal restocking takes place. Any order of genatope must be in the amount
of 6,900 kilograms.
EX 14-37 (Algo) Part 2: Identify the relevance of each of the figures given.
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:Required Information EX 14-37 (Algo) Special Order (LO 14-4, 14-5) [The following information applies to the questions displayed below.] Intercontinental's special order requires 1,700 kilograms of genatope, a solid chemical regularly used in the company's products. The current stock of genatope is 9,200 kilograms at a book value of 8.70 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 9.30 p per kilogram. Without the special order, the purchasing manager predicts that the price will be 8.90 p when normal restocking takes place. Any order of genatope must be in the amount of 6,900 kilograms. EX 14-37 (Algo) Part 2: Identify the relevance of each of the figures given. 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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