FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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)
Expert Solution
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Step 1
When business has option to select one alternative out of two alternatives, then alternative which has least cost and maximum benefit should be selected.
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Answer of both (i) and (ii)arrow_forwardWhich of the following statements is FALSE? O a. The mark up is a percentage applied to base cost. O b. A major advantage of mark up pricing is that standard mark ups are easy to apply. Oc. The mark up can be calculated using a variety of bases. O d. The mark up is an absolute rule.arrow_forwardA fixed cost is a cost that never varies. O True O Falsearrow_forward
- if we produce goods over the capacity, should we consider the fixed marketing cost and variable marketing cost when making the decision to accept or reject a special offer?arrow_forwardVariable costing income will be greater than absorption costing income when: a. Sales is greater than production. b. contribution pricing is applied c. Production is less than or equal to sales. d. Production is greater than salesarrow_forward(Variable cost = Total cost - Fixed cost - Net profit) you have not consider the net profit in the calculation. I think it should be added right ?arrow_forward
- Which of the following statements regarding marginal costing is incorrect? Select one: O A. It is useful long-term planning technique OB. It assumes that fixed costs remain fixed over relevant activity ranges O C. It assumes that variable costs vary in proportion to activity O D. It assumes that costs can be classified as variable or fixedarrow_forwardFor each situation, list the assumption, principle, or constraint that has been violated, if any. List only one answer for each situation. a. East Lake Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold, is not certain. choose one of the assumption, principle or constraint Going concern assumptionPeriodicity assumptionNo violationHistorical cost principleRevenue recognition principleEconomic entity assumption b. Hilo Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.) choose one of the assumption, principle or constraint Historical cost principleGoing concern assumptionRevenue recognition principleNo violationPeriodicity assumptionEconomic entity assumption c. Gomez, Inc. is…arrow_forwardA cost that cannot be changed because it arises from a past decision and is irrelevant to future decisions is a. An uncontrollable cost. d. An opportunity cost. b. An out-of-pocket cost. e. An incremental cost. c. A sunk cost.arrow_forward
- 7. Which of the following is the best definition of a variable cost? A. A variable cost is one which is directly traceable to an activity of the business for which the cost will be used. B. A variable cost is one which is associated with goods or services purchased, or produced, for sale to customers. C. A variable cost is one which changes with changes in the level of activity, over a defined period of time. D. A variable cost is one which is spread over a number of activities of the business for which costs are to be determined.arrow_forwardWhich of the following statements correctly complete the sentence:"Gross Margin equals":I. sales revenue less (minus) cost of goods sold.II. contribution margin less (minus) fixed costs.III. operating income plus all period costs.IV. sales revenue less (minus) cost of goods manufactured.arrow_forward
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