When evaluating if a company should accept a new contract to produce more product it should: Evaluate all possible fixed cost of accepting the contract. Evaluate the propose contract using a contribution margin approach. Accept the new contract if the sales price for the product is equal to or higher than the current sale price. Accept the new contract if fixed costs will remain the same.
When evaluating if a company should accept a new contract to produce more product it should: Evaluate all possible fixed cost of accepting the contract. Evaluate the propose contract using a contribution margin approach. Accept the new contract if the sales price for the product is equal to or higher than the current sale price. Accept the new contract if fixed costs will remain the same.
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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When evaluating if a company should accept a new contract to produce more product it should:
- Evaluate all possible fixed cost of accepting the contract.
- Evaluate the propose contract using a contribution margin approach.
- Accept the new contract if the sales price for the product is equal to or higher than the current sale price.
- Accept the new contract if fixed costs will remain the same.
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