Asked by heidy anastasia on Apr 29, 2024
Verified
If a company has excess capacity and present markets will not be affected it would be profitable to accept an order at a special unit price even though the price is less than the unit variable cost to manufacture the item.
Excess Capacity
A situation where a company can produce more goods or services than currently demanded by its market.
Unit Variable Cost
The variable cost associated with producing one unit of a product, including materials, labor, and other costs that vary with production volume.
Special Unit Price
A unique price offered for a product or service, typically different from the standard pricing.
- Develop an understanding of the criteria for accepting special orders and pricing decisions.
Verified Answer
Learning Objectives
- Develop an understanding of the criteria for accepting special orders and pricing decisions.
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