How does opportunity cost enter into a make or buy decision?

Q: Cost-Savings Sharing Pricing Defined?

A: It is a project pricing technique where the savings in the cost of the project are mutually shared…

Q: How would you define profit planning? What is the importance of profit planning?

A: a) Profit planning is a progression of steps being taken to arrive at an ideal level of profit. Such…

Q: Explain what is Make-or-Buy Decision?

A: Decision making: It is a vital capacity in the management, since decision making is identified with…

Q: Explain the difference between price-takers and price-setters.

A: When a company cannot dictate prices then it is known as price taker. On the contrary, when a…

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: When should special pricing orders be accepted?

A: Special pricing order: A special order is a unique one time order made by a customer. In this order…

Q: When Decision making is affected by both personal perspective and characteristics this phenomenon…

A: Decision making is referred to as the process of making choices through an identification of the…

Q: how present value is useful in economic decision making

A: Present value (PV) is the current value of a future sum of money or a stream of cash flows, given a…

Q: What is the decision rule for selling a product as is or processing it further?

A: Definition:   Differential analysis: Differential analysis refers to the analysis of differential…

Q: FIFO cost of goods sold?

A: Goods available for sale Cost of goods sold + Ending inventory As per LIFO method,   Cost of…

Q: “Relevant costs for pricing decisions are full costs of the product.” Do you agree? Explain.

A: Pricing Decisions:Pricing decisions are those decisions that are related to ascertain the price of a…

Q: What is opportunity cost rate?

A: The opportunity cost is the cost of the option or alternative missed due to the acceptance of the…

Q: Define the term “opportunity cost.” How may this cost be relevant in a make-or-buy decision?

A: Cost is defined as the total amount of money spent by the company for the production or creation of…

Q: What does the lower-of-cost-or-market (LCM) rule require?

A: Lower-of-cost-or-market: The lower-of-cost-or-market (LCM) is a method which requires the reporting…

Q: What is an opportunity cost and why should it be included when making decisions?

A: Opportunity costs is the costs of next best alternative foregone by accepting current alternative.…

Q: What questions should managers answer when considering special pricing orders?

A: Definition:   Special Pricing: When businesses get Special orders from its customers for bulk…

Q: Why opportunity cost is measured and relate with the evaluation of alternative, can it be an…

A: Cost or expenditure is the total amount spent by an individual, group and company to make a finished…

Q: which of the following could affect the price

A: Stocks are prone to systematic and unsystematic risks. Factors or risk that affect the entire…

Q: political cost hypothesis

A: Political cost hypothesis states that if the political costs are higher, managers use accounting…

Q: What are the advantages and disadvantages of target pricing versus cost-based pricing?

A: Advantages of target pricing are as follows: It help in controlling in cost It provide profit with…

Q: Identify at least two (2) irrelevant costs in a make vs buy decision

A: Irrelevant costs are those costs that do not change if any of the alternatives are selected between…

Q: Why is the contribution margin an important concept forincremental decision making?

A:

Q: What are the limitations of TCE approach to the make or buy decision?

A: TCE Approach is Transaction Cost Economics Theory. It means an activity should be performed within…

Q: Explain Make-or-Buy Decision?

A: Meaning:  It is a decision which is made to either manufature a product or service in house ( by…

Q: How does capacity affect transfer pricing decisions?

A:

Q: Define the Make-or-Buy Decision?

A: A make or buy decision is to choose whether to manufacture the produce in-house or purchase it from…

Q: What is the make or buy decision?

A: Managerial accounting:   Managerial accounting is more focused towards analyzing information and…

Q: what is Political cost hypothesis ?

A: The financial statement will be prepared by the company to know the financial position of the…

Q: Please use an example to explain the opportunity-cost concept and why it is used in decision-making.

A: Opportunity Cost - It is the value of best alternative when a particular decision was made by higher…

Q: What behavioral tendency do people often exhibit with regard to opportunity costs?

A: Opportunity cost:   An opportunity cost is the possible benefit given up when the choice of one…

Q: What is the meaning of Resource Market?

A: In business terms, anything which acts as input and contributes to the production process refers to…

Q: Define opportunity cost

A: Opportunity costs represent the benefits an individual, investor or business misses out onwhen…

Q: What is the quantity decision? The pricing decision?

A:

Q: What is frequency regarding the make or buy decision?

A: Make or Buy: Make or Buy decision are normal condition arises in front of management due to…

Q: How do you calculate Benefit Cost Ratio (BCR). Mention the decision making process of BCR

A: The present value of the benefit is divided by the cost and investment in order to calculate the…

Q: What is opportunity cost? How is this concept used in TVM analysis, and where is it shown on the…

A: Opportunity Cost is the cost of the next best alternative forgone. In other words, it is the return…

Q: When is it more appropriate to use market-based transfer price rather than cost-based transfer…

A: Transfer pricing:- Its the price at which one unit of a company sells goods to its another unit.…

Q: Define the term opportunity cost, and give an example of one.

A: Opportunity cost: It is the benefit which is foregone by choosing next best alternative. In mutually…