General Business ACC212 Chapter Notes - Chapter 7: Opportunity Cost, Outsourcing
29 Nov 2017
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Obtain additional business by making price concessions. Assumes sales of the products in other markets would not be affected by special order. Assumes company is not operating at full capacity. Accept an order at a special price example. Based strictly on total cost of per unit ( + ), reject offer as cost exceeds selling price of . Accept an order at a special price . Of several types of decisions that involve incremental analysis, the most common are: accept an order at a special price. make or buy component parts. sell products or process further. all of the above. Outsourcing: the decision to buy parts or services rather than making them. Baron co. incurs the following costs to make 25,000 switches: Switches can be purchased for per switch (,000: eli(cid:373)i(cid:374)ates all (cid:448)aria(cid:271)le (cid:272)osts a(cid:374)d (cid:1004),(cid:1004)(cid:1004)(cid:1004) of fixed (cid:272)osts; ho(cid:449)e(cid:448)er, Based on analysis of costs under both alternatives: purchasing adds ,000 to cost of switches.
