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Accept or reject a special order - Accountingverse The general rule is to accept a special order if the benefits exceed costs Otherwise, turn down respectfully If the business has excess capacity to fill the special order, it would accept if incremental sales revenue exceeds incremental variable costs
10. 2 Evaluate and Determine Whether to Accept or Reject a . . . When deciding whether to accept a special order, management must consider several factors: The capacity required to fulfill the special order Whether the price offered by the buyer will cover the cost of producing the products
Managerial Accounting Final Exam Flashcards - Quizlet Management is considering a one-time-only special order There is sufficient idle capacity to fill the order without affecting any normal sales Which one of the following is NOT relevant in making the decision?
Chapter Four: Short-term Decision Making Accept or Reject . . . What is a Special Order? Sometime, companies decide whether to accept or reject an order that is outside the scope of normal sales Special order are often offered at a lower price than customers pay for the product In addition, special order occur when companies have unused capacity
Unit 7 Managerial Accounting for Decision Making: Make or Buy . . . Accept or Reject a Special Offer •Think about capacity and alternative use of capacity Key Factors: Capacity Sufficient Capacity (Idle or unused capacity is sufficient to meet special offer order) Option I Curtail Regular Sales Insufficient Capacity (Idle or unused capacity is not
Influence of order acceptance policies on optimal capacity . . . Furthermore, the study shows that a high cost reduction potential exists for simultaneously optimizing capacity investment and order acceptance policy if the production system can decide whether or not to accept an order