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multiple choice question number 4
I correctly answered this question but for my own interest question 2 i would like to know the reason wny not considered
Beft co is considering permanently ceasing production of the clover leaf plaques
Which of the follwing factors should be considered in this decision
1)The head office costs apportioned to the clover leaf plaques
2)The decommissioning costs for the clever leaf plaque
3) the budget for clover leaf plaques shows a loss for next year
4)The impact on reputation of reducing the range of plaques produced by Beft co
1)head office cost never even deducted when a division is shut down it is not specific fixed cost relating to the division
2) decommissioing cost should be deducted so considered
4)also if one product or division is shut down it impacts other product too
3) is this because there is no information relating to the product is making loss?I think because of this.
You have not said in which exam you have found this question – I cannot remember the name of every question in every exam!!!
We only consider those costs that will change as a result of ceasing production. If the total cost is not changed then it is not relevant to the decision.
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