With a special order decision,the fixed costs of existing facilities
A)do not change and are therefore irrelevant.
B)change in proportion of the order to net sales.
C)do not change and are relevant.
D)change drastically.

Question

Quizplus · Accepted Answer

Fixed costs are those costs that remain constant regardless of the level of production or sales. Therefore, with a special order decision, the fixed costs of existing facilities do not change and are irrelevant because they will not affect the decision-making process. The focus will instead be on variable costs and the impact of the additional order on sales and profitability.

With a Special Order Decision,the Fixed Costs of Existing Facilities