Which of the Following Is a Major Consideration When Analyzing

question 23

Multiple Choice

Which of the following is a major consideration when analyzing a special order?

• A)the price must be high enough to cover any incremental costs to fill the order
• B)the company must have a good stock turnover ratio
• C)the profit margin of the special sale must be higher than the regular sales
• D)the sunk costs of the decision must not exceed the irrelevant costs

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Definitions:

Separability

The ability to isolate and measure an asset or liability from the entity that owns it, for accounting or valuation purposes.

Business Combination

A transaction or other event in which an acquirer gains control over one or more businesses, often involving mergers, acquisitions, or consolidations.

Net Present Value

A method used in capital budgeting to evaluate and compare the profitability of investments, calculating the difference between the present value of cash inflows and outflows over a period of time.

Cost

The value of the economic resources used as a result of producing or doing something.