A Department Accepts a New Order from a Customer

question 44

Multiple Choice

A department accepts a new order from a customer. It has already incurred £100 for design costs. It has also incurred costs of £200 for visits by sales staff. If the order is accepted a quality inspector will be transferred from another department. The inspector earns £20,000 per year. If the order is accepted there will be additional training costs of £700.
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In this decision the differential design costs are:

• A)£0.
• B)£100.
• C)£200.
• D)£300.

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Definitions:

Preferred Dividends

Dividends that are paid out to preferred shareholders at a fixed rate before any dividends are paid to common shareholders.

Common Dividends

Payments made to shareholders out of a corporation's earnings, reflecting the portion allocated to holders of common shares.

Liquidation

The process of converting assets into cash, often during the winding down of a business or the selling off of stock.

Preferred Stock

Preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shareholders typically receive dividends before common shareholders.