ACCOUNTING PRINCIPLES V1 6/17 >C<
ACCOUNTING PRINCIPLES V1 6/17 >C<
3rd Edition
ISBN: 9781323761434
Author: Horngren
Publisher: PEARSON C
Question
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Chapter 25, Problem P25.27BPGB
To determine

Concept Introduction:

Variable Cost: Variable cost is a cost that changes when the volume of production changes, in the same direction and in the same proportion.

Fixed Cost: Fixed cost is a cost that remains constant, irrespective of changes in production volume.

Manufacturing cost: Manufacturing cost is a cost of manufacturing products or goods.

Selling cost: Selling cost is a cost that incurs to the market and sale of product or goods.

Administrative cost: The costs which are not classified under manufacturing or selling costs fall under administrative cost.

Relevant Cost: Relevant cost is the incremental and inevitable cost that is incurred when making a specific business decision. Relevant cost is useful in eliminating unrequited data that makes the decision making process complex.

Irrelevant Cost: Irrelevant cost is the cost that will remain unchanged as a result of specific business decisions

1.

To Identify: The each cost in the income statement as relevant or irrelevant to Nautical’s decision.

To determine

2.

To Decide: Nautical should accept special sales orders or not.

To determine

3.

To Identify: Nautical should consider long-term factors in deciding whether to accept the special sales order.

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Chapter 25 Solutions

ACCOUNTING PRINCIPLES V1 6/17 >C<

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