How does a company determine whether to sell a product as is or process it further quizlet?

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Should joint costs be considered in a sell or process further decision explain?
Which of the following should be ignored when deciding whether to sell a product as is or process it further?
What steps are frequently involved in management's decision making process?
When deciding whether to discontinue a product managers should only consider the costs that will be saved?

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Terms in this set (56)

Increase by $27,000
explanation: The segment margin lost due to the elimination would amount to $125,000, which would decrease the operating income by $125,000. Sales revenue of the L-Touch would increase by $280,000 ($700,000 × 40%) and its variable costs would increase by $128,000 ($320,000 × 40%), which would increase the contribution margin by $152,000 ($280,000 − $128,000). Therefore, the net increase in operating income would be $27,000 ($152,000 − $125,000).

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Should joint costs be considered in a sell or process further decision explain?

Fundamentals of the Decision to Sell or Process Further Any costs incurred prior to the split-off point are irrelevant to the decision to process further as those are sunk costs; only future costs are relevant costs. Even though joint product costs are common costs, they are routinely allocated to the joint products.

Which of the following should be ignored when deciding whether to sell a product as is or process it further?

Which of the following should be ignored when deciding whether to sell a product as is or process it further? explanation: The cost incurred in producing a product so far is a sunk cost that does not change with the decision and thus is an irrelevant cost.

What steps are frequently involved in management's decision making process?

Step 1: Identify the decision. You realize that you need to make a decision. ... .

Step 2: Gather relevant information. ... .

Step 3: Identify the alternatives. ... .

Step 4: Weigh the evidence. ... .

Step 5: Choose among alternatives. ... .

Step 6: Take action. ... .

Step 7: Review your decision & its consequences..

When deciding whether to discontinue a product managers should only consider the costs that will be saved?

When deciding whether to discontinue a product, managers should only consider the costs that will be saved. Fixed costs that will continue to exist if a product is discontinued are relevant. For some merchandisers, the primary constraint may be cubic feet of display space.