What is trade-in allowance accounting?
Trade-In Allowance Definition Trade-in allowance is a reduction in the trade value or sale price of an asset offered for sale by the seller in exchange of the asset owned by the buyer. It is the value decreased from the selling price of a new asset in exchange of old asset.
When deciding whether or not to accept a special order management should consider?
What will always be a relevant cost?
only variable costs are relevant. all costs are relevant if they change between alternatives.
What is the key factor in performing incremental analysis?
Which is an advantage of a special order?
What is the financial advantage disadvantage of accepting the special order?
The financial advantage (disadvantage) of accepting a special order is calculated by deducting the incremental manufacturing and selling costs and expenses from the incremental revenue.
What role does a trade in allowance on old equipment play in a decision to retain or replace equipment?
How do you calculate incremental profit or loss?
- Determine the number of units sold during a period of growth.
- Determine the price of each unit sold during a period of growth.
- Multiply the number of units by the price per unit.
- The result is incremental revenue.
When a company is involved in more than one?
A conglomerate is a multi-industry company – i.e., a combination of multiple business entities operating in entirely different industries under one corporate group, usually involving a parent company and many subsidiaries. Conglomerates are often large and multinational.
Is incremental analysis the same as CVP analysis?
Which of the following is an irrelevant cost?
What will most likely occur if a company eliminates an unprofitable segment when a portion of fixed costs are unavoidable?
What happens if an unprofitable segment is discontinued?
What happens if an unprofitable segment is eliminated? it is impossible for net income to decrease. variable expenses of the eliminated segment will be eliminated.
What is the role of incremental reasoning in business decision?
Are opportunity costs Incremental?
When should you drop a product line?
Sometimes when a business sees that a product, department, or location is losing money, the first reaction is to shut it down. Discontinuing operations is a decision that should only be taken after careful consideration and number crunching.
What is the general rule for eliminating an unprofitable department?
A company should eliminate any segment in which the contribution margin is less than the fixed costs that are unavoidable. The elimination of an unprofitable product line will always increase the total profits of a company.
Which of the following are relevant in deciding whether to eliminate an unprofitable segment?
In deciding whether to eliminate an unprofitable segment or product, the relevant costs are the variable costs that drive the contribution margin, if any, produced by the segment or product. Disposition of the segment’s or the product’s fixed expenses and opportunity cost must also be considered.
Which would be ignored when deciding whether to drop a product line?
Answer: d. The amount of unavoidable fixed costs will not be considered when deciding whether to drop a product line since these costs do not vary whether the product line is continued or dropped. These costs are therefore irrelevant and will have zero effect on computations of both alternatives.
Why do companies discontinue successful products?
How do you know if a product is discontinued?
The company can tell you if it has permanently discontinued the item and, if so, whether you have any options. For example, the company might provide a list of retailers or suppliers that still have the product in stock.
What does discontinuation mean?
What does product discontinuation mean?
PRODUCT DISCONTINUATION means a process by which the electrical or mechanical components of a Product become no longer compatible with original product or the Product itself will no longer be in mass production.