Special Order – NBC Institute

PM – Nov 2019 – L2 – Q1c – Decision-Making Techniques

Advise management on whether to accept a special order for 25,000 units of Apet at a price of N12 per unit, considering material procurement.

Question

A customer has just placed a special order for 25,000 units of Apet and the customer is willing to pay N12.00 per unit. Advise the management whether to accept or reject the order. Assume that for any shortfall in material A required to produce the order, it can be bought at a price of N2.00 per kg. (10 Marks)

Answer

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Tags: Material Procurement, Relevant Costs, Special Order
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2019

MI – May 2023 – L1 – SB – Q2b – Decision-Making Techniques

This question asks whether BBY Limited should accept or reject a special offer based on marginal cost analysis.

Question

BBY Limited manufactures jugs. They have just received an offer for the supply of the same product at ₦500 per jug. The plan is to manufacture 5,000 units within the next 3 months with the following budget:

Expense	N’000
Direct materials	1,000
Direct labour	700
Variable production overhead	600
Variable selling and distribution overhead	700
Fixed production overhead	1,000
Fixed selling and distribution overhead	500
Fixed admin overhead	300

The special offer customer would pick up the products from the factory.

i. Advise whether the company should accept or reject the offer using the data above. Support your computation and decision with appropriate reasons.

ii. Would you make a different decision if the budget figures were as follows?

Expense	N’000
Direct materials	1,030
Direct labour	925
Variable production overhead	645
Variable selling and distribution overhead	350
Variable admin overhead	430
Fixed production overhead	1,100
Fixed selling and distribution overhead	520
Fixed admin overhead	310

(Show your computations and state reasons for your decision).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Analysis, Make or buy decisions, Special Order
Level: Level 1

Topic: Decision-making techniques
Series: MAY 2023

PM – Nov 2019 – L2 – Q1c – Decision-Making Techniques

Advise management on whether to accept a special order for 25,000 units of Apet at a price of N12 per unit, considering material procurement.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Material Procurement, Relevant Costs, Special Order
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2019

MI – May 2023 – L1 – SB – Q2b – Decision-Making Techniques

This question asks whether BBY Limited should accept or reject a special offer based on marginal cost analysis.

Question

Expense	N’000
Direct materials	1,000
Direct labour	700
Variable production overhead	600
Variable selling and distribution overhead	700
Fixed production overhead	1,000
Fixed selling and distribution overhead	500
Fixed admin overhead	300

The special offer customer would pick up the products from the factory.

i. Advise whether the company should accept or reject the offer using the data above. Support your computation and decision with appropriate reasons.

ii. Would you make a different decision if the budget figures were as follows?

Expense	N’000
Direct materials	1,030
Direct labour	925
Variable production overhead	645
Variable selling and distribution overhead	350
Variable admin overhead	430
Fixed production overhead	1,100
Fixed selling and distribution overhead	520
Fixed admin overhead	310

(Show your computations and state reasons for your decision).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Analysis, Make or buy decisions, Special Order
Level: Level 1

Topic: Decision-making techniques
Series: MAY 2023

Question Tag: Special Order

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PM – Nov 2019 – L2 – Q1c – Decision-Making Techniques

Advise management on whether to accept a special order for 25,000 units of Apet at a price of N12 per unit, considering material procurement.

MI – May 2023 – L1 – SB – Q2b – Decision-Making Techniques

This question asks whether BBY Limited should accept or reject a special offer based on marginal cost analysis.

PM – Nov 2019 – L2 – Q1c – Decision-Making Techniques

Advise management on whether to accept a special order for 25,000 units of Apet at a price of N12 per unit, considering material procurement.

MI – May 2023 – L1 – SB – Q2b – Decision-Making Techniques

This question asks whether BBY Limited should accept or reject a special offer based on marginal cost analysis.

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PM – Nov 2019 – L2 – Q1c – Decision-Making Techniques

Advise management on whether to accept a special order for 25,000 units of Apet at a price of N12 per unit, considering material procurement.

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MI – May 2023 – L1 – SB – Q2b – Decision-Making Techniques

This question asks whether BBY Limited should accept or reject a special offer based on marginal cost analysis.

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PM – Nov 2019 – L2 – Q1c – Decision-Making Techniques

Advise management on whether to accept a special order for 25,000 units of Apet at a price of N12 per unit, considering material procurement.

You're reporting an error for "PM – Nov 2019 – L2 – Q1c – Decision-Making Techniques"

MI – May 2023 – L1 – SB – Q2b – Decision-Making Techniques

This question asks whether BBY Limited should accept or reject a special offer based on marginal cost analysis.

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