Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa. To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Question

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Answer 1

Question

Chapter 11, Problem 24P

Requirement - 1:

To determine

Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa.

To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Requirement - 2:

To determine

To Explain: Should Birch close the plant for 2 months?

Requirement − 3:

To determine

Indifferent level: Indifferent level of units sold refers to the beak even level of units sold because at this level a company will be indifferent between closing the plant or keeping it open. In other words we can say that at this level a company will not get any financial advantage either on closing the plant or on keeping it open.

To identify: Indifferent level of units sold for closing the plant or keeping it open.

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Answer 2

Question

Chapter 11, Problem 24P

Requirement - 1:

To determine

Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa.

To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Requirement - 2:

To determine

To Explain: Should Birch close the plant for 2 months?

Requirement − 3:

To determine

Indifferent level: Indifferent level of units sold refers to the beak even level of units sold because at this level a company will be indifferent between closing the plant or keeping it open. In other words we can say that at this level a company will not get any financial advantage either on closing the plant or on keeping it open.

To identify: Indifferent level of units sold for closing the plant or keeping it open.

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Answer 3

Question

Chapter 11, Problem 24P

Requirement - 1:

To determine

Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa.

To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Requirement - 2:

To determine

To Explain: Should Birch close the plant for 2 months?

Requirement − 3:

To determine

Indifferent level: Indifferent level of units sold refers to the beak even level of units sold because at this level a company will be indifferent between closing the plant or keeping it open. In other words we can say that at this level a company will not get any financial advantage either on closing the plant or on keeping it open.

To identify: Indifferent level of units sold for closing the plant or keeping it open.

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Answer 4

Question

Chapter 11, Problem 24P

Requirement - 1:

To determine

Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa.

To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Requirement - 2:

To determine

To Explain: Should Birch close the plant for 2 months?

Requirement − 3:

To determine

Indifferent level: Indifferent level of units sold refers to the beak even level of units sold because at this level a company will be indifferent between closing the plant or keeping it open. In other words we can say that at this level a company will not get any financial advantage either on closing the plant or on keeping it open.

To identify: Indifferent level of units sold for closing the plant or keeping it open.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 24P

Requirement - 1:

To determine

Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa.

To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Requirement - 2:

To determine

To Explain: Should Birch close the plant for 2 months?

Requirement − 3:

To determine

Indifferent level: Indifferent level of units sold refers to the beak even level of units sold because at this level a company will be indifferent between closing the plant or keeping it open. In other words we can say that at this level a company will not get any financial advantage either on closing the plant or on keeping it open.

To identify: Indifferent level of units sold for closing the plant or keeping it open.

Answer 6

Chapter 11, Problem 24P

Requirement - 1:

To determine

Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa.

To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Answer 7

Chapter 11, Problem 24P

Requirement - 1:

To determine

Continue or Discontinue: For making decision about continuing or discontinuing a particular plant, we need to know the impact of that particular plant on the overall operating profits. So when overall operating profits are higher in case of continuing then that particular plant should be continue or vice versa.

To identify: Financial advantage (disadvantage) if Birch closes its own plant.

Answer 8

Requirement - 2:

To determine

To Explain: Should Birch close the plant for 2 months?

Answer 9

Requirement - 2:

To determine

To Explain: Should Birch close the plant for 2 months?

Answer 10

Requirement − 3:

To determine

Indifferent level: Indifferent level of units sold refers to the beak even level of units sold because at this level a company will be indifferent between closing the plant or keeping it open. In other words we can say that at this level a company will not get any financial advantage either on closing the plant or on keeping it open.

To identify: Indifferent level of units sold for closing the plant or keeping it open.

Answer 11

Requirement − 3:

To determine

Indifferent level: Indifferent level of units sold refers to the beak even level of units sold because at this level a company will be indifferent between closing the plant or keeping it open. In other words we can say that at this level a company will not get any financial advantage either on closing the plant or on keeping it open.

To identify: Indifferent level of units sold for closing the plant or keeping it open.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - What is a relevant cost?Ch. 11 - Define the following terms: incremental cost,...Ch. 11 - Are variable costs always relevant costs? Explain.Ch. 11 - Prob. 4Q Ch. 11 - “Variable costs and differential costs mean the...Ch. 11 - Prob. 6Q Ch. 11 - Prentice Company is considering dropping one of...Ch. 11 - Prob. 8Q Ch. 11 - What is the danger in allocating common fixed...Ch. 11 - Prob. 10Q

Solution Summary: The author explains that if Birch closes its own plant, there will be a total financial disadvantage.

To Explain: Should Birch close the plant for 2 months?

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Chapter 11 Solutions