Which of the Following Is True If a Company Can

question 183

Multiple Choice

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.

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Definitions:

Break-even Sales

The amount of revenue from sales at which a business's expenses and income are equal, resulting in no net profit or loss.

Western Division

Typically refers to a geographic or organizational segment of a company located in the western region or sector it operates in.

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, such as rent, salaries, and insurance.

Break-even Sales

The amount of revenue required to cover total costs, both fixed and variable, with no profit or loss.