Managerial Acct questions P4

When deciding to acce pt or reject a special order, which of the following costs is most likely to be irrelevant? A. The wages of direct labor to make the order Depreciation on the machinery used to make the order The raw material used to make the order The electricity used to run the machine to make the order In accepting a special order, which one of the following is not considered? A. Whether production capacity exists to complete the order Whether demand for other products will be affected Whether the fixed costs of production will increase Whether the contribution margin per unit is greater for products in the special order than the contribution margin for the same products sold to regular customers Which of the following is relevant in deciding whether to accept or reject a special order? 42 The impact the order will have on existing business The price that will be charged on the special order The impact the order will have on existing business and the price that will be charged on the special order None of these answer choices are correct. Wagner Enterprises is contemplating accepting a special or The company determined that the 43 order will cause an increase in fixed costs. Should the order be accepted? No, as any increase in fixed costs will reduce the company's profit Yes, as long as the total revenue is greater than the associated variable costs Yes, if the increase in fixed costs is less than the incremental revenue Yes, if the incremental revenue is greater than the total incremental costs 44. Cinotti Bread Depot bakes and sells each bagel for $1.25. The cost of producing 600,000 bagels in the prior year was $750,000 Revenues Direct materials 330,000 66,000 Direct labor Manufacturing overhead fixed 132,000 Manufacturing overhead variable 84,000 At the start of the current year, Cinotti received a special order for 15,000 bagels to be sold for $1.10 per bagel. The company estimates it will incur an additional $700 in total fixed costs in order to lease a special machine needed to bake the bagels in the customer's logo shape. Also this order will not affect any of its other operations. Should the company accept the special order? A. No, profit will decrease by $2,950 No, profit will decrease by $2,250 Yes, profit will increase by $3,800 Yes, profit will increase by $500