Question

A special order generally should be accepted if: Select one: a. its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order. b. excess capacity exists and the revenue exceeds all variable costs associated with the order. c. excess capacity exists and the revenue exceeds allocated fixed costs. d. the revenue exceeds total costs, regardless of available capacity. e. the revenue exceeds variable costs, regardless of available capacity.

Answer 1

A special order generally should be accepted if excess capacity exists and the revenue exceeds all variable costs associated with the order.

When the market's potential supply of a commodity is greater than the demand for that product, the situation known as excess capacity arises.

In manufacturing, the phrase "over capacity" is frequently used. At a manufacturing site, you can notice idle workers as a sign of overcapacity. Excess capacity, though, can also be found in the service industry.

For instance, there are places in the restaurant business that consistently have empty tables and a staff that seems unproductive. This inefficiency shows that although the space can handle more visitors, there is still a gap between customer demand and the restaurant's capacity.

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Answer 2

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A special order generally should be accepted if: Select one:

A. its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order.

B. excess capacity exists and the revenue exceeds all variable costs associated with the order.

C. excess capacity exists and the revenue exceeds allocated fixed costs.

D. the revenue exceeds total costs, regardless of available capacity.

E. the revenue exceeds variable costs, regardless of available capacity

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A special order generally should be accepted if: Excess capacity exists and the revenue exceeds all variable costs associated with the order.

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