Does Home Depot special order?

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What does B&H special order mean?

Be angry all you want

What is the 11th order No 5?

5. To quit my post only when properly relieved.

In what scenario would a special order be accepted?

The general rule is to accept a special order if the benefits exceed costs. Otherwise, turn down respectfully. If the business has excess capacity to fill the special order, it would accept if incremental sales revenue exceeds incremental variable costs.

When should a special order be accepted?

A special order generally should be accepted if: A) its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order.

Why does a special order decision frequently ignore fixed overhead?

These special orders are in addition to the planned production. Therefore, fixed overhead would not be applied to these jobs. This allows the company to make the products needed for the special order at a reduced cost. Although the price might be lower, the company may be able to achieve profit on the job.

What would be the consequences of accepting both special orders?

Accepting both special orders would increase the income of Waterways by $4,350. However, it will result to a negative effect to the production of Waterways because by just accepting the Canadian Company’s order, it will already reach their full capacity of production.

Are fixed costs included in special orders?

Units in normal production incur fixed costs, and fixed costs are excluded from the special order. An $8 per-unit price wouldn’t cover the full cost of the product in normal production.

What data are relevant in deciding whether to accept an order at a special price?

The relevant information in accepting an order at a special price is the difference between the variable manufacturing costs to produce the special order and expected revenues. Any changes in fixed costs, opportunity cost, or other incremental costs or savings (such as additional shipping) should be considered.

When making a decision irrelevant items are included in the analysis?

When making a decision, irrelevant items are included in the analysis in both alternatives when using: the total cost approach only.

What makes a cost relevant?

‘Relevant costs’ can be defined as any cost relevant to a decision. A matter is relevant if there is a change in cash flow that is caused by the decision. The change in cash flow can be: additional amounts that must be paid.

Which cost does not affect a decision?

What Is an Irrelevant Cost? Irrelevant costs are costs, either positive or negative, that would not be affected by a management decision. Irrelevant costs, such as fixed overhead and sunk costs, are therefore ignored when that decision is made.

What costs are relevant to decision making?

If you have two choices, and you choose A instead of B, relevant costs are those costs that will be different from those associated with choice B. These are costs that directly affect cash flow, the money coming in and going out of a business. Relevant costs include differential, avoidable, and opportunity costs.

Is opportunity cost relevant for decision making?

Let’s take another example to understand why opportunity costs are treated as relevant costs and is included as cost in many decision making situations even though these are not actual costs. A company is approached by a customer who wants to place an order for certain goods. Therefore, it is a relevant cost.

What are the 4 types of cost?

Types of Costs

Fixed Costs (FC) The costs which don’t vary with changing output.
Variable Costs (VC) Costs which depend on the output produced.
Semi-Variable Cost.
Total Costs (TC) = Fixed + Variable Costs.
Marginal Costs – Marginal cost is the cost of producing an extra unit.

Does cost really matter in making decisions?

The cost information system plays an important role in every organization within the decision-making process. The detailed analysis of costs, the calculation of production cost, the loss quantification, the estimating of work efficiency provides a solid basis for the financial control.

Why is cost so important?

Understanding your costs is vital for informed business decisions. It helps you determine the profitability of your operations and how to set prices. But proper costing is complex, and many businesses aren’t doing a good job.

What is the meaning of opportunity cost?

Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. The idea of opportunity costs is a major concept in economics.

Why is it important to classify cost?

Cost classification involves the separation of a group of expenses into different categories. A classification system is used to bring to management’s attention certain costs that are considered more crucial than others, or to engage in financial modeling.

What is the biggest benefit of cost classification?

Classification of costs into fixed and variable elements helps management to control costs effectively as fixed costs are incurred by management decisions and can be controlled only by the top management. Further, variable costs may be controlled even at the lower levels of management.

What are the 3 types of cost?

Types of costs

Fixed costs. Fixed costs are costs that do not vary with the level of output in the short term.
Variable costs. A variable cost varies in direct proportion with the level of output.
Semi-variable costs.
Total costs.
Direct costs.
Indirect costs.

What are the three elements of cost?

The Elements of Cost are the three types of product costs (labor, materials and overhead) and period costs.

Materials. Materials costs are the tangible goods used in producing the product.
Labor. Wages and salaries paid to employees involved in manufacturing are known as labor costs.
Overhead.
Period Costs.

What are the basic elements of cost?

The following chart shows the various elements of cost and how they are classified.

Direct or Indirect Materials. The materials directly contributed to a product and those easily identifiable in the finished product are called direct materials.
Direct Labor.
Overheads.

What are the types of cost control?

Several common cost-control tools help small companies operate efficiently.

Budgets. One of the most basic, common cost-control tools is a budget.
Checks and Balances. A variety of checks and balances also help you keep costs under control.
Software Integration.
Internal and External Audits.

What is basic concept of cost sheet?

A cost sheet is a statement that shows the various components of total cost for a product and shows previous data for comparison. A cost sheet document can be prepared either by using historical cost or by referring to estimated costs. A historical cost sheet is prepared based on the actual cost incurred for a product.

What is purpose of cost sheet?

The main objective of the cost sheet is to ascertain the cost of a product. The cost sheet helps in the ascertainment of cost to determine cost after they are incurred. It also helps to ascertain the actual cost or estimated cost of a Job.

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