Special-Order Decision, Alternatives, Relevant Costs Sequoia Paper Products, Inc., manufactures boxed stationery for sale to specialty shops. Currently, the company is operating at 90 percent of capacity. A chain of drugstores has offered to buy 33,000 boxes of Sequoia's blue-bordered thank-you notes as long as the box can be customized with the drugstore chain's logo. While the normal selling price is $5.80 per box, the chain has offered just $3.10 per box. Sequoia can accommodate the special order without affecting current sales. Unit cost information for a box of thank-you notes follows: Direct materials $2.10 0.39 Direct labor Variable overhead 0.09 Fixed overhead 2.05 Total cost per box $4.63 Fixed overhead is $421,000 per year and will not be affected by the special order. Normally, there is a commission of 8 percent of price; this will not be paid on the special order since the drugstore chain is dealing directly with the company. The special order will require additional fixed costs of $15,500 for the design and setup of the machinery to stamp the drugstore chain's logo on each box. Required: 1. Which alternative is more cost effective and by how much? Accept the special order ✓ The operating income would increase by $ X. 2. What if Sequoia Paper Products was operating at capacity and accepting the special order would require rejecting an equivalent number of boxes sold to existing customers? Which alternative would be better? Regular sales

Q: Define and give examples of the following terms: cost pool, cost object, and cost allocation (or…

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Q: Explain difference between prime costs and conversion costs.

A: Prime cost: It is the cost which is incurred for manufacturing a product. It includes direct…

Q: Understand thedifferences between directand indirect costs

A: Cost:   It refers to the economic value incurred by an organization for manufacturing a product or…

Q: What is meant by relevant costs and there use in making short-term decisions?

A: Cost refers to the amount of expenditure incurred by an individual or an entity in relation to goods…

Q: Define unavoidable fixed costs.

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Q: 3. Why there is a need to identify the standard cost?

A: Standard cost is the estimated cost of a certain process, resource or any item.

Q: Explanation of the meaning of the target costing ?

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Q: Which of the following costs is relevant in decisionmaking? committed costs accounting costs cash…

A: Following is the answer to the given question

Q: Giving examples, distinguish between  Direct costs and indirect costs

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Q: relevant and irrelevant cost

A: Relevant and irrelevant costs are categories of costs based on their effect on decision making.

Q: Which type of cost center has a planning focus, and which type has an evaluation focus?

A: Cost Center: It is a department within an organization to which costs can be assigned.

Q: Define the term Cost approaches.

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Q: Why there is a need to identify the standard co

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A:

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A:

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Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.  

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.