Rapid Growth Pty Ltd is presently operating at full capacity.They received a special order that,if accepted,would require refusing some sales to regular customers.Which of the following factors should management consider when making their decision?
Variable costs of special order
Fixed costs of equipment
Opportunity costs

Question

Quizplus · Accepted Answer

Management should consider the variable costs of the special order, as accepting it will require resources and materials that may not have been factored into the current operating costs. They should also consider the opportunity costs of accepting the special order at the expense of regular customers, who could potentially take their business elsewhere. The fixed costs of equipment, on the other hand, are already sunk costs and should not be a factor in the decision-making process.

Rapid Growth Pty Ltd Is Presently Operating at Full Capacity