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Identify all relevant costs or revenue that are applicable to the decisions stated below:


Reject a special order. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)



a. Contribution margin of product.


b. Sales revenue at split-off point.


c. Interference with other production.


d. Contribution margin per unit of limited resource.


e. Selling price of supplier.

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Answer:

All relevant costs or revenue applicable are options

a. Contribution margin of product.

b. Sales revenue at split-off point.

 d. Contribution margin per unit of limited resource.

Explanation:

A) Contribution margin is a product's price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. The total contribution margin generated by an entity represents the total earnings available to pay for fixed expenses and to generate a profit

B) Sales revenue at split-off point. The split-off point is the point at which joint production stops and processing for separate products begins.

It is calculated by dividing the sales value of each product by the total sales to determine the relative sales value of each product.

D) The contribution margin per unit divided by the units of constrained resource required to produce one unit of product. is the contribution margin per unit divided by the units of constrained resource required to produce one unit of product.

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