Assuming a company has excess operating capacity,a special order should be accepted if its incremental revenues exceed the incremental costs,and the special order does not negatively impact existing business.

Question

Quizplus · Accepted Answer

If the incremental revenues from a special order exceed the incremental costs and the order does not negatively impact the existing business, then accepting the order can help the company utilize its excess capacity and generate additional profits. However, if the special order negatively impacts the company's existing business, such as by cannibalizing existing customer orders, then it may not be worth accepting even if the incremental revenues exceed the incremental costs.

Assuming a Company Has Excess Operating Capacity,a Special Order Should