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$ 6,000 Note: This answer assumes that fixed costs are
unaffected by the order and that variable marketing
costs must be incurred on the special order.
Managerial Accounting 12-27 Special Order Decisions focus on relevant costs and benefits if excess capacity exists, focus on:
incremental revenues from the order incremental costs of filling the order (variable & fixed) do not focus on irrelevant costs and benefits if operating at capacity, also consider opportunity
cost of filling the order
ignore allocated common costs, sunk costs and
other costs unaffected by the special order consider qualitative factors total relevant costs = incremental costs + opportunity costs
Managerial Accounting 12-28 Special Order Decisions Decision rule: Accept if: incremental revenues > incremental costs +
opportunity costs Reject if: incremental revenues < incremental costs +
opportunity costs Managerial Accounting 12-29 Joint Costs and Joint Products In some industries, a number of end products
are produced from a single raw material input. Two or more products produced from a common
input are called joint products.
joint products The point in the manufacturing process wher...
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