When there is excess capacity,it makes sense to accept a one-time-only special order for less than the current selling price when:
A)it never makes sense.
B)the company placing the order is in the same market segment as your current customers.
C)incremental revenues exceed incremental costs.
D)additional fixed costs must be incurred to accommodate the order.

Question

Quizplus · Accepted Answer

When there is excess capacity, the incremental revenues from a one-time-only special order should exceed the incremental costs. This means that the company will generate additional profits from the order even if it is sold for less than the current selling price. However, if accepting the order requires additional fixed costs, it may not make sense to accept it. The company should also consider if the customer placing the order is in the same market segment as its current customers, as it may impact its relationship with existing customers.

When There Is Excess Capacity,it Makes Sense to Accept a One-Time-Only