49 A major factor in evaluating a special order is *The expected contribution margin on the order.The possible effects on sales at regular prices.The availability of capacity to produce the additional unitsAll of the choices

There are various factors that affect the decision for a special order.

A major factor in evaluating a special order is * O The expected contribution margin on the order. O The possible effects on sales at regular prices. O The availability of capacity to produce the additional units O All of the choices

A major factor in evaluating a special order is * O The expected contribution margin on the order. O The possible effects on sales at regular prices. O The availability of capacity to produce the additional units O All of the choices

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 21E: For the theory of constraints, which of the following determines the production rate of the plant?...

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Question

A major factor in evaluating a special order is *
The expected contribution margin on the order.
The possible effects on sales at regular prices.
The availability of capacity to produce the additional units
All of the choices

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Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis? Select one: a. As long as the contribution margin is a positive number, net income will be positive b. As long as variable costs are more than fixed costs, net income will be negative c. As long as the contribution margin is greater than fixed costs, net income will be positive d. As long as the sales price per unit is greater than fixed costs per unit, net income will be positive
Special order, opportunity cost. In order to determine whether a special order should be accepted at full capacity, the sales price of the special order must be compared to the per unit: a. Contribution margin of the special order. b. Variable cost and contribution margin of the special order. c. Variable cost and contribution margin of the next best alternative. d. Variable cost of current production and the contribution margin of the next best alternative
Special order, opportunity cost. In order to determine whether a special order should be accepted at full capacity, the sales price of the special order must be compared to the per unit: Contribution margin of the special order. Variable cost and contribution margin of the special order. Variable cost and contribution margin of the next best alternative. Variable cost of current production and the contribution margin of the next best alternative.
g) Briefly explain the impact of each of the following scenarios on the contribution margin per unit and thebreak-even point:(i) Sales volume increases(ii) Total fixed cost decreases(iii) Selling price per unit increases(iv) Variable cost per unit increases
Required: 1. Prepare a contribution format income statement. 2. Prepare a traditional format income statement. 3. Calculate the selling price per unit. 4. Calculate the variable cost per unit. 5. Calculate the contribution margin per unit. 6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
Profitability changes may be simply calculated by using what kind of tool: sales price/volume/variable costs/fixed costs.
In a product mix decision, which is the mostimportant factor to consider in order to try tomaximise profit? contribution per unit of the productproduct unit selling pricevariable cost per unit of the productcontribution per unit of a scarce resource used to make the product
sensitivity analysis refers to: A. the analysis of the impact of different volumes of sales on contribution B. the contribution margins on the different products during the year C. the total sales over the break-even sales D. the mix of variable and fixed costs E. none of the above
Contribution margin is a.the same as sales revenue b.the excess of sales over variable costs c.another term for volume in the "cost-volume-profit" analysis d.profit
Accepting a special order will improve overall net operating income if the revenue from the special order exceeds: Multiple Choice the contribution margin on the order. the incremental costs associated with the order. the variable costs associated with the order. the sunk costs associated with the order.
Which of the followings is not correct about cost-based pricing? Select one: a. Total fixed costs change as the production amount changes. b. Total costs are the sum of total fixed and variable costs. c. Total variable costs increase due to a rise in production level. d. Variable costs per unit tend to be constant with respect to number of units produced.
If a company chooses a price to charge for its product by adding up all the expenses necessary to make the product and then adding in a profit, this is known as: a) Target Costing Ob) Skimming Pricing Oc) Cost-Based Pricing Od) Odd-Even Pricing Oe) Penetration Pricing