When making a decision to accept a special order management must consider?
Question: mcq When making a decision to accept a special order, management must consider the impact that additional manufacturing time will have on unit costs of its current products. whether the purchaser will accept additional high costs of a special order.
Should the company accept or reject the special order?
The general rule is to accept a special order if the benefits exceed costs. Otherwise, turn down respectfully. If the business has excess capacity to fill the special order, it would accept if incremental sales revenue exceeds incremental variable costs.
How are special order decisions 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.
When making a decision regarding accepting a special order a manager should consider all of the following except?
Calculate the Price
| Which of the following best describes a “sunk cost”? | Costs that were incurred in the past and cannot be changed |
|---|---|
| Managers should consider all of the following when deciding whether to accept a special order, except | fixed costs that will not be affected by the order. |
How do you accept or reject a trend?
Accepting or rejecting a trend is purely a matter of personal choice. You can even consider setting your trend. It is advisable to accept a trend only if you are wholly satisfied with what it has to offer. If you make the decision half-heartedly, you will feel a misfit and not be comfortable with your choice.
Which of the following is an important qualitative factor to consider regarding a special order?
An important Qualitative factor to consider regarding a special order is the “effect the sale of special order units will have on the the sale of regularly priced units”.
Why do you always encounter trends and fads?
Trends and fads are mostly followed by young people because of social validation, and this is why we always encounter them.
How are prices set for special orders?
Usually a business receives special orders from customers at a price lower than normal. This method of pricing special orders, in which price is set below normal price but the sale still generates some contribution per unit, is called contribution approach to special order pricing.
Which of the following is a cost that Cannot be affected by any future action?
Relevant costs are costs that will be affected by a managerial decision. Irrelevant costs are those that will not change in the future when you make one decision versus another. Examples of irrelevant costs are sunk costs, committed costs, or overheads as these cannot be avoided.
Which of the following qualitative factors should be considered when evaluating a make or buy decision?
Examples of qualitative factors include the reputation and reliability of the suppliers, the long-term outlook regarding production or purchasing the product, and the possibility of changing or altering the decision in the future and the likelihood of changing or reversing the decision at a future date.
