accounting final notess

accounting final notess - Chapter 7 Differential costs are...

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Chapter 7 Differential costs are sometimes referred to as relevant costs. Sunk costs shoult NOT be taken into consideration when making decisions. Fixed overhead is NEVER a differential cost. Fixed costs are sometimes incremental costs. Allocated common costs are not relevant when considering whether or not to drop a product. Opportunity costs are always incremental costs. The joint costs incurred in a joint product situation are incurred before the split-off point. A joint product’s cost is $18, which includes $6 of allocated joint cost. Its sales price is $16. In this case the data are misleading because the $6 allocated joint cost will be incurred even if the product is discontinued. According to the theory of constraints, optimizing use of a constraint requires production of the product with the highest contribution margin per unit of the constrained resource Generally, parts should be inspected prior to being sent to a department that is a bottleneck. Chapter 8 To determine the profit-maximizing price a manager must estimate the quantity demanded for various prices and estimate the variable costs. Cost plus pricing is inherently circular for manufacturing firms. Target costing requires specification of desired levels of profit.
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This note was uploaded on 06/08/2008 for the course BA 212 taught by Professor Krislen-adams during the Spring '08 term at Linn Benton Community College.

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accounting final notess - Chapter 7 Differential costs are...

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