Chapter_13_Study_Guide - Chapter 13 Relevant Costs: -...

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Chapter 13 Relevant Costs: - Future costs - Differ between alternatives - Typical examples: direct materials, direct labor, opportunity costs, direct fixed costs, others **Disclaimer: The items discussed below are not all inclusive of chapter 13 and the final exam. The line items included in each example are also not all inclusive – variations exist! Make-or-Buy Decisions internal versus external productions Example: Make Buy Direct Materials $XX $0 + Direct Labor XX 0 *Fixed costs must be DIRECTLY related + Variable OH XX 0 or they are NOT relevant + Direct Fixed OH* XX 0 + Purchase Price 0 XX = TOTAL XX vs. XX Whichever is lower is cheaper to the company and the preferred option Special-Order Decisions Accept or reject a specially priced order - Determine what costs are associated when producing the special order (may include extra equipment or a specialist) - Determine the new price for the special order - Compare operating incomes if accepted or rejected Example: Accept Reject Price
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This note was uploaded on 10/20/2011 for the course ACC 222 taught by Professor Brewer during the Spring '08 term at Miami University.

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Chapter_13_Study_Guide - Chapter 13 Relevant Costs: -...

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