Management

CHAPTER 7 DIFFERENTIAL COST ANALYSIS FOR OPERATING DECISIONS Questions, Exercises, and Problems: Answers and Solutions 7.1See text edition or glossary at the end of the book. 7.2Fixed cost be only unflinching in the short- safari so any(prenominal) long-run decision may have derived function coefficient located cost. For instance, decisions affecting capacity would include derivative fixed be. 7.3Short-term determine decisions argon based on differential be, any monetary value higher than differential be lead increase dough even if it is lower than dear cost. However, in the long-term, prices must hide the wide cost of producing the product. 7.4No. Facility-sustaining costs are fixed in the short; they will be incurred regardless of production level. Therefore, they are not differential and should not be considered in a short-run pricing decision. 7.5 abounding cost information is clutch for long-term pricing decisions. 7.6d.the differential costs of producing the order. 7.7b.depreciation of buildings. 7.8Setup or order costs are costs incurred each age an order is hardened or a production run is made. Carrying costs are the costs of keeping inventory, for example, maintaining warehouse facilities. [pic] 7.

9The costs that are pertinent for make-or-buy decisions are the differential costs. 7.10True. The objective of the conjecture of constraints is to increase throughput contri just nowion. 7.11 some(prenominal) differential costs should be considered in the decision, including overtime, and costs of special shifts or other mea ns of expanding capacity. 7.12Answers wil! l vary, but should entirely be short-term pricing decisions. 7.13In the long-term full costs must be met so full-cost information is reclaimable for decisions affecting the long-term. 7.14The statement is true in general short-term decisions in which there is excess capacity. However, in any mishap where the decision affects capacity, the statement would not be true. 7.15In the...If you postulate to keep up a full essay, order it on our website: BestEssayCheap.com

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