Which of the Following Must Be True for a Company

question 28

Multiple Choice

Which of the following must be true for a company to accept a special order?

• A)Variable costs must be less than the contribution margin.
• B)Incremental revenues must be greater than incremental costs.
• C)Opportunity costs must be greater than total revenue.
• D)Total fixed costs must stay constant.

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Definitions:

Options

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price within a certain period.

Held

When securities are retained in an investment portfolio without being sold.

Financial Engineering

Creating and designing securities with custom-tailored characteristics.

Securities

Securities are financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.