When Making a Decision to Accept a Special Order, Management

question 59

Multiple Choice

When making a decision to accept a special order, management must consider

• A)the impact that additional manufacturing time will have on unit costs of its current products.
• B)whether the purchaser will accept additional high costs of a special order.
• C)whether a lower price will convince the purchaser to become a regular customer.
• D)whether capacity exists to meet the demand of the order.

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Definitions:

Note Payable

A written agreement to pay a specified sum of money, plus interest, on a set date, representing a liability for the issuer.

Proceeds

The total amount of money received from a transaction before any deductions are made for costs or expenses.

Interest-Bearing

Referring to debt securities or loans that accrue interest over time, payable to the holder or lender.

Note Payable

A written promise to pay a specified amount of money, usually with interest, at a designated future date.