If a Company Is Operating at Less Than Capacity, the Incremental

question 84

True/False

If a company is operating at less than capacity, the incremental costs of a special order will likely include variable manufacturing costs, but NOT fixed costs.

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Definitions:

Consignor

The person or entity that owns goods on consignment and sends them to the consignee for sale or display.

Days' Sales in Inventory

A financial metric that measures the average number of days it takes for a company to sell its entire inventory during a given period.

Consignee

The individual or entity to whom goods are shipped to be sold on behalf of the owner, retaining no legal ownership until sales occur.

Expense Recognition Principle

An accounting principle that dictates that expenses should be recognized in the period in which they are incurred to generate revenues, matching expenses against revenues in the period in which the revenue was earned.