Argus Company anticipates that other sales will be affected by the acceptance of a special order. What should the company do?
A) Reject the order.
B) Consider the opportunity cost of lost sales in the incremental analysis.
C) Accept the order.
D) Accept the order if the plant is below capacity.

Question

Quizplus · Accepted Answer

The company should consider the opportunity cost of lost sales in the incremental analysis before making a decision on accepting the special order. If the lost sales outweigh the potential profits from the special order, it may be better to reject the order. However, if the lost sales are minimal, the company can accept the order without affecting its regular sales. Capacity should also be considered, but it is not the only factor that should be taken into account.

Argus Company Anticipates That Other Sales Will Be Affected by the Acceptance