Which of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity?
A) Net income will not be affected.
B) Net income will increase if the special sales price per unit exceeds the unit variable costs.
C) Net income will decrease.
D) Additional fixed costs will probably be incurred.

Question

Quizplus · Accepted Answer

If the special sales price per unit exceeds the unit variable costs, accepting the special order will result in additional contribution margin, which will increase net income. Since the special order can be accepted without affecting regular sales and within plant capacity, there should be no additional fixed costs. Therefore, net income will not be affected if the special order is accepted as long as it generates a positive contribution margin.

Which of the Following Is True If a Company Can