A company is within plant capacity.It is contemplating whether a special order should be accepted.The order will not impact regular sales.If the company accepts a special order, what will occur?
A)Incremental costs will not be affected.
B)Net income will increase if the special sales price per unit exceeds the unit variable costs.
C)There are no incremental revenues.
D)Both fixed and variable costs will increase.

Question

Quizplus · Accepted Answer

If the special sales price per unit exceeds the unit variable costs, accepting the special order will increase net income. Incremental costs may be affected depending on the terms of the special order, but there will be incremental revenues from the order. Fixed costs will not necessarily increase unless additional resources are needed to fulfill the order.

A Company Is Within Plant Capacity