Rejecting an order may have implications for future

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8. Rejecting an order may have implications for future orders (i.e., professors would be reluctant to order books from this publisher again). Jo Nathan should consider factors such as prior history with the customer and potential future sales. If a book is relatively new, Jo Nathan might consider running a full batch and holding the extra books in case of a second special order or just hold the extra books until next semester. If the special order comes at heavy volume times, Jo should look at the opportunity cost of filling it, i.e., accepting the order may interfere with or delay the printing of other books.
8-38 (35 min.) Production-Volume Variance Analysis and Sales Volume Variance. 1. and 2. Fixed Overhead Variance Analysis for Dawn Floral Creations, Inc. for February Actual Fixed Static Budget Standard Hours Overhead Fixed Overhead × Budgeted Rate (600 × 1.5 × $6*) $9,200 $9,000 $5,400 $200 U $3,600 U Spending variance Production-volume variance * fixed overhead rate = (budgeted fixed overhead)/(budgeted DL hours at capacity) = $9,000/(1000 x 1.5 hours) = $9,000/1,500 hours = $6/hour 3. An unfavorable production-volume variance measures the cost of unused capacity. Production at capacity would result in a production-volume variance of 0 since the fixed overhead rate is based upon expected hours at capacity production. However, the existence of an unfavorable volume variance does not necessarily imply that management is doing a poor job or incurring unnecessary costs. Using the suggestions in the problem, two reasons can be identified.
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