The general rule for special orders is:
A) Profit should be greater after the special order than before it
B) Only take special orders when excess capacity exists
C) The organization should be as well-off after taking the order as it was before taking it
D) Ignore all fixed costs associated with the special order

Question

Quizplus · Accepted Answer

The general rule for special orders is that the organization should not be worse off after taking the order than it was before. Therefore, only take special orders if they are profitable and if they do not negatively impact the organization's regular operations. Option A is not always true, as the profit margin could be lowered due to additional variable costs associated with the special order. Option B is partially true, but special orders can also be taken when excess capacity does not exist if it can lead to a profitable opportunity. Option D is inaccurate because fixed costs must be considered in determining the profitability of a special order.

The General Rule for Special Orders Is