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What type of relevant costing decision would call

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Reference no: EM132619807

Question 1: Can direct materials ever be irrelevant in a 'make' or 'buy' decision? Explain.

Question 2: Specific Water Company produces water bottles. It has been asked by a large retail shop to supply water bottles which would be libelled in the name of the retail shop. The retail shop would pay Specific Water Company a price of $25 per bottle. However, its regular price is $26. If Specific Water Company agrees to sell water bottles to the retail shop at a price of $25,

(i) what type of relevant costing decision would you call this?

(ii) Is it possible to make net benefit (earnings) by selling at a price lower than the regular price?

(iii) What other reasons might motivate to sell at a price below regular price?

Reference no: EM132619807

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