ACCT346 Incremental Cost Analysis

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ACCT346 Incremental Cost Analysis
What is meant by relevant costs?  What is meant by differential costs…

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ACCT346 Incremental Cost Analysis

ACCT346 Incremental Cost Analysis

Discussions Week 4 All Students Post 46 Pages

What is meant by relevant costs?  What is meant by differential costs? How do constraints relate to manufacturing companies? How would you tie all these ideas together with costs that need to be included in the decision making process?…

Problem (#1) for everyone to work on.
Zoom Company’s market for the Model #6549 has changed significantly, and Zoom has had to drop the sales price per unit from $1,000 to $625. There are 1000 units in the work in process inventory that have costs of $670 per unit. Zoom could sell these units in their current state for $280 each. It will cost Zoom $208 per unit to complete these units so that they can be sold for $625.
a) Which of these dollar amounts were not relevant in this problem? WHY?
b) Which amounts are relevant to any decision? WHY?
c) Which costs are “sunk” costs? WHY?
d) If we are dealing with 1000 units, what is the total dollar difference by re-working the units instead of not re-working them? SHARE your calculation…