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Costs associated with two alternatives, code-named Q and R, being considered by Corniel Corporation are listed below: Alternative Q Alternative R Supplies costs Power
Costs associated with two alternatives, code-named Q and R, being considered by Corniel Corporation are listed below: Alternative Q Alternative R Supplies costs Power costs $63,000 $39,000 $58,000 $39,000 Which costs are relevant and which are not relevant in the choice between these two alternatives? A. Neither supplies costs nor power costs are relevant B. Both supplies costs and power costs are relevant C. Only supplies costs are relevant D. Only power costs are relevant Special Order Poppy has received a special order for 1,000 units of its product at a special price of $125. The product currently sells 18,000 units for $150 and has the following manufacturing costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit cost Per unit $ 45 30 35 25 $ 135 Assume that Poppy has sufficient capacity to fill the order without harming normal production and sales. a. If Poppy accepts the order, what effect will the order have on the company's short-term profit? (Answer: increase by $15,000) b. What minimum price should Poppy be willing to accept a special order? (Answer: minimum price is $110)
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