Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Question

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Answer 1

Question

Chapter 21, Problem 1STQ

To determine

Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Expert Solution & Answer

Answer to Problem 1STQ

Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Explanation of Solution

Option (a): There is an idle capacity of 20,000 (50,000units−30,000units) units. So, Company P should know the intention of Company CM for the acceptance of order of 10,000 units. If Company P sells the products at lesser price than the manufacturing cost then it will incur loss. Thus, option (a) is wrong answer.

Option (b): The average cost of producing the 30,000 units $45 Company P already know that the average cost of production would be lesser than $45. Hence, the company would be least concerned with this factor. Thus, Option (b) is correct answer.

Option (c): The opportunity cost is not considered by the management. If the management rejects the order then the opportunity cost would be the profits produced by the special order of 10,000 units. Hence, the opportunity cost of not accepting the order will be considered by the management. Thus, Option (c) is wrong answer.

Option (d): The incremental cost of manufacturing additional 10,000 units of Product WC would be lesser than the current average cost. Hence, this factor would be considered. Hence, option (d) is wrong answer.

As per the above explanation, Option (a), (c), and (d) are wrong answer. Thus, Option (b) is correct answer.

Conclusion

Therefore, Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

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Answer 2

Question

Chapter 21, Problem 1STQ

To determine

Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Expert Solution & Answer

Answer to Problem 1STQ

Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Explanation of Solution

Option (a): There is an idle capacity of 20,000 (50,000units−30,000units) units. So, Company P should know the intention of Company CM for the acceptance of order of 10,000 units. If Company P sells the products at lesser price than the manufacturing cost then it will incur loss. Thus, option (a) is wrong answer.

Option (b): The average cost of producing the 30,000 units $45 Company P already know that the average cost of production would be lesser than $45. Hence, the company would be least concerned with this factor. Thus, Option (b) is correct answer.

Option (c): The opportunity cost is not considered by the management. If the management rejects the order then the opportunity cost would be the profits produced by the special order of 10,000 units. Hence, the opportunity cost of not accepting the order will be considered by the management. Thus, Option (c) is wrong answer.

Option (d): The incremental cost of manufacturing additional 10,000 units of Product WC would be lesser than the current average cost. Hence, this factor would be considered. Hence, option (d) is wrong answer.

As per the above explanation, Option (a), (c), and (d) are wrong answer. Thus, Option (b) is correct answer.

Conclusion

Therefore, Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

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Answer 3

Question

Chapter 21, Problem 1STQ

To determine

Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Expert Solution & Answer

Answer to Problem 1STQ

Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Explanation of Solution

Option (a): There is an idle capacity of 20,000 (50,000units−30,000units) units. So, Company P should know the intention of Company CM for the acceptance of order of 10,000 units. If Company P sells the products at lesser price than the manufacturing cost then it will incur loss. Thus, option (a) is wrong answer.

Option (b): The average cost of producing the 30,000 units $45 Company P already know that the average cost of production would be lesser than $45. Hence, the company would be least concerned with this factor. Thus, Option (b) is correct answer.

Option (c): The opportunity cost is not considered by the management. If the management rejects the order then the opportunity cost would be the profits produced by the special order of 10,000 units. Hence, the opportunity cost of not accepting the order will be considered by the management. Thus, Option (c) is wrong answer.

Option (d): The incremental cost of manufacturing additional 10,000 units of Product WC would be lesser than the current average cost. Hence, this factor would be considered. Hence, option (d) is wrong answer.

As per the above explanation, Option (a), (c), and (d) are wrong answer. Thus, Option (b) is correct answer.

Conclusion

Therefore, Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

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Answer 4

Question

Chapter 21, Problem 1STQ

To determine

Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Expert Solution & Answer

Answer to Problem 1STQ

Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Explanation of Solution

Option (a): There is an idle capacity of 20,000 (50,000units−30,000units) units. So, Company P should know the intention of Company CM for the acceptance of order of 10,000 units. If Company P sells the products at lesser price than the manufacturing cost then it will incur loss. Thus, option (a) is wrong answer.

Option (b): The average cost of producing the 30,000 units $45 Company P already know that the average cost of production would be lesser than $45. Hence, the company would be least concerned with this factor. Thus, Option (b) is correct answer.

Option (c): The opportunity cost is not considered by the management. If the management rejects the order then the opportunity cost would be the profits produced by the special order of 10,000 units. Hence, the opportunity cost of not accepting the order will be considered by the management. Thus, Option (c) is wrong answer.

Option (d): The incremental cost of manufacturing additional 10,000 units of Product WC would be lesser than the current average cost. Hence, this factor would be considered. Hence, option (d) is wrong answer.

As per the above explanation, Option (a), (c), and (d) are wrong answer. Thus, Option (b) is correct answer.

Conclusion

Therefore, Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 21, Problem 1STQ

To determine

Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Expert Solution & Answer

Answer to Problem 1STQ

Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Explanation of Solution

Option (a): There is an idle capacity of 20,000 (50,000units−30,000units) units. So, Company P should know the intention of Company CM for the acceptance of order of 10,000 units. If Company P sells the products at lesser price than the manufacturing cost then it will incur loss. Thus, option (a) is wrong answer.

Option (b): The average cost of producing the 30,000 units $45 Company P already know that the average cost of production would be lesser than $45. Hence, the company would be least concerned with this factor. Thus, Option (b) is correct answer.

Option (c): The opportunity cost is not considered by the management. If the management rejects the order then the opportunity cost would be the profits produced by the special order of 10,000 units. Hence, the opportunity cost of not accepting the order will be considered by the management. Thus, Option (c) is wrong answer.

Option (d): The incremental cost of manufacturing additional 10,000 units of Product WC would be lesser than the current average cost. Hence, this factor would be considered. Hence, option (d) is wrong answer.

As per the above explanation, Option (a), (c), and (d) are wrong answer. Thus, Option (b) is correct answer.

Conclusion

Therefore, Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Answer 6

Chapter 21, Problem 1STQ

To determine

Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Expert Solution & Answer

Answer to Problem 1STQ

Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Explanation of Solution

Option (a): There is an idle capacity of 20,000 (50,000units−30,000units) units. So, Company P should know the intention of Company CM for the acceptance of order of 10,000 units. If Company P sells the products at lesser price than the manufacturing cost then it will incur loss. Thus, option (a) is wrong answer.

Option (b): The average cost of producing the 30,000 units $45 Company P already know that the average cost of production would be lesser than $45. Hence, the company would be least concerned with this factor. Thus, Option (b) is correct answer.

Option (c): The opportunity cost is not considered by the management. If the management rejects the order then the opportunity cost would be the profits produced by the special order of 10,000 units. Hence, the opportunity cost of not accepting the order will be considered by the management. Thus, Option (c) is wrong answer.

Option (d): The incremental cost of manufacturing additional 10,000 units of Product WC would be lesser than the current average cost. Hence, this factor would be considered. Hence, option (d) is wrong answer.

As per the above explanation, Option (a), (c), and (d) are wrong answer. Thus, Option (b) is correct answer.

Conclusion

Therefore, Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Answer 7

Chapter 21, Problem 1STQ

To determine

Identify the factor(s) that should be least considered by Company P for accepting or rejecting the order.

Answer 8

Expert Solution & Answer

Answer to Problem 1STQ

Option (b) is correct answer.

The $45 average cost of manufacturing Wizard cards.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (a): There is an idle capacity of 20,000 (50,000units−30,000units) units. So, Company P should know the intention of Company CM for the acceptance of order of 10,000 units. If Company P sells the products at lesser price than the manufacturing cost then it will incur loss. Thus, option (a) is wrong answer.

Option (b): The average cost of producing the 30,000 units $45 Company P already know that the average cost of production would be lesser than $45. Hence, the company would be least concerned with this factor. Thus, Option (b) is correct answer.

Option (c): The opportunity cost is not considered by the management. If the management rejects the order then the opportunity cost would be the profits produced by the special order of 10,000 units. Hence, the opportunity cost of not accepting the order will be considered by the management. Thus, Option (c) is wrong answer.

Option (d): The incremental cost of manufacturing additional 10,000 units of Product WC would be lesser than the current average cost. Hence, this factor would be considered. Hence, option (d) is wrong answer.

As per the above explanation, Option (a), (c), and (d) are wrong answer. Thus, Option (b) is correct answer.