- This topic has 7 replies, 3 voices, and was last updated 1 year ago by
.
- Posts
Hello Tutor can you please help me in the following question.
The Fruit Company (F Co) currently grows fruit which customers pick themselves from the fields before paying. F Co is concerned that a large number of customers are eating some of the fruit whilst picking it and are therefore not paying for all of it. As a result, it has to decide whether to hire staff to pick and package the fruit instead. The following values and costs have been identified:
(i) The total sales value of the fruit currently picked and paid for by customers
(ii) The cost of growing the fruit
iii) The cost of hiring staff to pick and package the fruit
iv) The total sales value of the fruit if it is picked and packaged by staff instead
Which of the above are relevant to the decision?a) All of the above
b) (ii), (iii) and (iv) only
c) (i), (ii) and (iv) only
d) (i), (iii) and (iv) onlyThe decision has to be what changes because of what you are trying to do……
it has to decide whether to hire staff to pick and package the fruit instead of customers who currently pick themselves from the fields before paying.
They are concerned that a large number of customers are eating some of the fruit whilst picking it and are therefore not paying for all of it, So the total sales value of the fruit currently picked and paid for by customers is relevant.Hello Sir, I read through the relevant costing chapter 2-3 times and I am still unable to understand what’s going on in this chapter. Please help me
Yes, but when it comes to answering questions, I am unable to find a way to solve them.
Can I suggest you start with this:
Then go through the chapters again, watch the videos again
Now read the questions.Think ……relevant cost is a term that describes the changing costs of a particular decision.
What is relevant to the decision that’s being made.Is the question asking
Can we do a special order? Is it financially viable?
Should we shutdown part of the business?
Shall we further process a unit?
Should we make or buy the product?
Do we have a restriction on the amount we can make….. a limiting factor then how much do we save from making them in house….until we have used all the limiting factor up then how many should we buy in?
- You must be logged in to reply to this topic.