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Case 1.2 Boswell Plumbing Products
Please reference this chapter and case in your textbook. Provide your responses to the Discussion Board question. Your responses must simulate the exchange of ideas that would occur among accounting professionals. Responses should demonstrate effective communication skills, as well as thoughtful and objective analysis.
The initial response must demonstrate effective communication skills and analysis that is thoughtful and objective. You must support your responses by searching beyond the chapter (i.e., managerial accounting literature and/or any other valid external source). Include examples, as appropriate, to evidence your case point. Your response must also include proper American Psychological Association (APA) citation and referencing with working web links. Further, it must include 350 words.
Case 1.2 Boswell Plumbing Products (
LO3
)
Boswell Plumbing Products produces a variety of valves, connectors, and fixtures used in commercial and residential plumbing applications. Recently a senior manager walked into the cost accounting department and asked Nick Somner to tell her the cost of the D45 valve. Nick quickly replied, “Why do you want to know?” Noticing that the manager appeared somewhat startled by this question, he explained, “The cost information you need depends on the decision you’re going to make. You might be thinking of increasing a scheduled production run of 3,000 D45s by 100 units or scheduling an additional production run, or you might even be thinking of dropping the product. For each of these decisions, the cost information that you need is different.”
Required
Using the concept of incremental analysis, expand on Nick’s response of, “Why do you want to know?” What cost information would be relevant to a decision to drop the product that would not be relevant to a decision to increase a production run by 100 units?
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