If a company must expand capacity to accept a special order it is likely that there will be
A) an increase in unit variable costs.
B) no increase in fixed costs.
C) an increase in variable and fixed costs per unit.
D) an increase in fixed costs.

Question

Quizplus · Accepted Answer

Expanding capacity involves increasing the resources used to produce goods or services. Fixed costs are those that do not change with changes in production levels, such as investment in equipment and buildings. Therefore, if a company must expand capacity, there will likely be an increase in fixed costs.

If a Company Must Expand Capacity to Accept a Special