which statement is true concerning the decision rule on whether to make or buy? (course hero)

Which statement is true concerning the decision rule on whether to make or buy?

Which statement is true concerning the decision rule on whether to make or buy? The company should buy if the cost of buying is less than the cost of producing.

Which of the following are relevant in deciding whether to eliminate an unprofitable segment?

In deciding whether to eliminate an unprofitable segment or product, the relevant costs are the variable costs that drive the contribution margin, if any, produced by the segment or product. Opportunity cost and reduction of fixed expenses must also be considered.Jan 3, 2022

Under what situations should the company accept a special order for less than the current selling price?

Decision Considerations When the company is operating at less than its maximum capacity and the company has enough capacity to produce and fill the special order, the order should be accepted if the additional sales exceed the additional variable costs.

What happens if an unprofitable segment is eliminated?

What happens if an unprofitable segment is eliminated? it is impossible for net income to decrease. variable expenses of the eliminated segment will be eliminated. fixed expenses allocated to the eliminated segment will be eliminated.

Which of the following types of decisions involves deciding whether to accept or reject an order that is outside the scope of normal sales?

Which of the following types of decisions involves deciding whether to accept or reject an order that is outside the scope of normal sales? A make-or-buy decision is the same as: an outsourcing decision.

Which of the following is the decision rule of a sell or process further decision?

The basic rule in a sell or process further decision is to process further as long as the incremental revenue is: less than the incremental processing costs. more than the incremental processing costs.

Which of the following factors should be considered in deciding whether to accept a special order?

When deciding whether to accept a special order, management must consider several factors: The capacity required to fulfill the special order. Whether the price offered by the buyer will cover the cost of producing the products. The role of fixed costs in the analysis.Dec 4, 2021

What is the advantages of accepting special order?

Get ready for this: You can accept a lower sales price for a special order and still be profitable. The fixed costs have already been paid for with earlier production. They are past (sunk) costs, so you do not need to worry about covering them with your special-order revenue.Mar 26, 2016

When should a special order be accepted quizlet?

A special one-time order is acceptable if the unit sales price is greater than the unit variable cost. Max Company has excess capacity. A customer proposes to buy 400 widgets at a special unit price even though the price is less than the unit variable cost to manufacture the item.

What is a segment elimination decision?

A segment elimination decision involves a comparison between revenue that will be lost through the elimination and the. avoidable cost of operating the segment. Only the costs that can be avoided or saved by the decision to eliminate are relevant to the revenue versus cost comparison.

When Analysing a make or buy decision costs that will be incurred regardless of the decision?

Irrelevant costs are the costs that will be incurred regardless of whether the product is manufactured internally or purchased externally.

How do you get rid of unprofitable products?

A decision to discontinue a product line or segment requires you to consider how your decision affects both revenues and expenses. Focus on revenues that will change as a result of your decision and on incremental costs. Then choose the option that is more profitable (or perhaps just less unprofitable).Mar 26, 2016