Case 1 2
Case 1-2 Boswell Plumbing
What cost information would be relevant to a decision to drop the product that would not be to relevant to a decision to increase a production run by 100 units?
We need to look at our fixed cost. If we dropping the product the fixed cost will stay the same but for less making products. It will be more expensive to produce because the fixed costs are less spread over x product made. The incremental revenue minus the incremental cost equal the incremental profit. We will have to look at for a positive profit .
What cost information would be relevant to a decision to drop the product that would not be to relevant to a decision to increase a production run by 100 units?
We need to look at our fixed cost. If we dropping the product the fixed cost will stay the same but for less making products. It will be more expensive to produce because the fixed costs are less spread over x product made. The incremental revenue minus the incremental cost equal the incremental profit. We will have to look at for a positive profit .