A one-time-only special order decision _____
A)has no role in segregating special and regular customers
B)must involve unused plant capacity to avoid lost profits on regularly priced items
C)allows a company to sell products at prices that only cover fixed costs
D)involves selling products at a percentage over retail price due to the short time period involved

Question

Quizplus · Accepted Answer

The question suggests that the special order decision is a one-time-only event, implying that it is not a regular occurrence. Thus, the company must make sure that the production cost of the special order items is lower than the selling price to avoid losing profits on regularly priced items. Therefore, the company must use its unused plant capacity to produce the specially ordered items at a lower cost and still earn a profit. Option A is incorrect because the question does not suggest any role of segregation between special and regular customers. Option C is incorrect because the question does not suggest that the company can only cover the fixed cost. Finally, option D is incorrect because the question does not suggest that the company will sell its products at a percentage over retail price.

A One-Time-Only Special Order Decision _____