Gibbs Corporation makes indoor gas fireplaces. A standard fireplace includes unit-level materials, labor, and overhead costs. In addition, the company incurs product-level engineering and advertising costs. Lastly, the company incurs facility-level costs related to renting the manufacturing building A sales representative has been in contact with a building developer who wants to buy 20 fireplaces only if he can buy them at amount lower than Gibbs's selling price. Which of the following costs would be relevant to this special order decision?

Question

Quizplus · Accepted Answer

The unit-level materials, labor, and overhead costs are relevant to the special order decision as they directly relate to the production and sale of the 20 fireplaces. The facility-level building rental costs and the product-level engineering and advertising costs are not relevant to this decision as they are not directly related to the production and sale of the 20 fireplaces.

Gibbs Corporation Makes Indoor Gas Fireplaces