Deep Sea manufactures flotation vests in Charleston, South Carolina. Deep Sea's contribution margin income statement for the month ended March 31, 2024, contains the following data: (Click the icon to view the cost information.) Read the requirements. Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Deep Sea's decision. Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs Requirement 2. Prepare differential analysis Decision: in operating income ▼ ▼ ▼ C determine whether Deep Sea should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) Requirement 3. Identify long-term factors Deep Sea should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Deep Sea's managers also should consider the following Suppose Overboard wishes to buy 4,000 vests from Deep Sea. Deep Sea will not incur any variable selling and administrative expenses on the special order. The Deep Sea plant has enough unused capacity to manufacture the additional vests. Overboard has offered $7 per vest, which is below the normal sales price of $15. O A. How will Deep Sea's competitors react? Will they retaliate by cutting their prices and starting a price war? O B. Will Deep Sea's other customers find out bout the lower sale price Deep Sea accepted from Overboard? If so, O C. Will the special order customer come back again and again, asking for the same reduced price? OD. All of the above OE. None of the above I these other customers demand lower sale prices?
Deep Sea manufactures flotation vests in Charleston, South Carolina. Deep Sea's contribution margin income statement for the month ended March 31, 2024, contains the following data: (Click the icon to view the cost information.) Read the requirements. Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Deep Sea's decision. Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs Requirement 2. Prepare differential analysis Decision: in operating income ▼ ▼ ▼ C determine whether Deep Sea should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) Requirement 3. Identify long-term factors Deep Sea should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Deep Sea's managers also should consider the following Suppose Overboard wishes to buy 4,000 vests from Deep Sea. Deep Sea will not incur any variable selling and administrative expenses on the special order. The Deep Sea plant has enough unused capacity to manufacture the additional vests. Overboard has offered $7 per vest, which is below the normal sales price of $15. O A. How will Deep Sea's competitors react? Will they retaliate by cutting their prices and starting a price war? O B. Will Deep Sea's other customers find out bout the lower sale price Deep Sea accepted from Overboard? If so, O C. Will the special order customer come back again and again, asking for the same reduced price? OD. All of the above OE. None of the above I these other customers demand lower sale prices?
Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Chapter12: Activity-based Management
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Data table
Deep Sea
Income Statement
For the Month Ended March 31, 2024
Sales in Units
Net Sales Revenue
Variable Costs:
Manufacturing
Selling and Administrative
Total Variable Costs
Contribution Margin
Fixed Costs:
Manufacturing
Selling and Administrative
Total Fixed Costs
Operating Income
$
35,000
525,000
175,000
103,000
278,000
247,000
123,000
93,000
216,000
31,000
Transcribed Image Text:Deep Sea manufactures flotation vests in Charleston, South Carolina. Deep Sea's contribution margin income statement
for the month ended March 31, 2024, contains the following data:
(Click the icon to view the cost information.)
Read the requirements.
Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Deep Sea's decision.
Variable Manufacturing Costs
Variable Selling and Administrative Costs
Fixed Manufacturing Costs
Fixed Selling and Administrative Costs
Requirement 2. Prepare a differential analysis to determine whether Deep Sea should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.)
Decision:
in operating income
▼
Suppose Overboard wishes to buy 4,000 vests from Deep Sea. Deep Sea will not incur any variable selling and
administrative expenses on the special order. The Deep Sea plant has enough unused capacity to manufacture the
additional vests. Overboard has offered $7 per vest, which is below the normal sales price of $15.
Requirement 3. Identify long-term factors Deep Sea should consider in deciding whether to accept the special sales order.
In addition to determining the special order's effect on operating profits, Deep Sea's managers also should consider the following:
O A. How will Deep Sea's competitors react? Will they retaliate by cutting their prices and starting a price war?
O B. Will Deep Sea's other customers find out about the lower sale price Deep Sea accepted from Overboard? If so, will these other customers demand lower sale prices?
O C. Will the special order customer come back again and again, asking for the same reduced price?
OD. All of the above
O E. None of the above
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