Answered: “Managers should consider only…

“Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further.”Do you agree? Explain.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 4DQ: A company accepts incremental business at a special price that exceeds the variable cost. What other...

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Similar questions

A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?
In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do not want to remain at the break-even point.
Which of the following is not a feature of full costplus sales pricing related to a range of a company’sproducts? it may not maximise profitit distinguishes between variable, fixed and opportunity costsit requires the apportionment of shared costsit ignores the relationship between demand and prices
When deciding whether to sell as is or process a product further, managers should ignore which of the following? a. The costs of processing the product thus far b. The cost of processing further c. The revenue if the product is sold as is d. The revenue if the product is processed further
Which of the following statements is true? An avoidable fixed production cost incurred before the split-off point in a joint process is relevant in a sell or process further decision. It is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs. Which of the following statements is true? Consistency demands that a cost that is relevant in one decision be regarded as relevant in other decisions as well. Variable costs are always relevant costs in decisions.
When deciding whether to sell as is or process a product further, managers should ignore which of the following? The costs of processing the product thus far The cost of processing further The revenue if the product is sold as-is The revenue if the product is processed further
Can a company use a target pricing model without a follow-on cost-savings sharing agreement? Why or why not?
Explain the meaning of (a) differential revenue, (b) differential cost, and (c) differential income. A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?
“ Managers must decide whether a product should be sold at splitoff or processed furthur.The sales value at splitoff method of joint-cost allocation is the best method for generating the information managers need for this decision.”Do you agree? Explain.
Which of the following is not an application of cost-volume-profit analysis? Setting prices for products and services. Performing strategic “what-if” analyses. Deciding whether to cut a product line. Determining the short-term cost or profit implications of many decisions. Deciding whether to make or buy a given product or service.
When making decisions, managers should consider a. revenues that differ between alternatives. b. costs that do not differ between alternatives. c. only variable costs. d. sunk costs in their decisions.
Management is considering a one-time-only special order. There is sufficient idle capacity to fill the order without affecting any normal sales. Which one of the following is NOT relevant in making the decision? Sunk costs Variable costs Fixed costs Differential costs