Special orders increase income if the revenue from the order exceeds the incremental variable and fixed costs incurred to fill the order.

Question

Quizplus · Accepted Answer

Special orders can be lucrative for a business if the revenue generated from the order exceeds both the incremental variable costs (additional costs incurred to produce the order) and the fixed costs (overhead costs that exist regardless of whether the order is taken). If the revenue exceeds these costs, the business will see an increase in income.

Special Orders Increase Income If the Revenue from the Order