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:

Markup

The uplift in the purchase price of items specifically to recover operational overhead and to make a profit.

Split-off Point

The stage in a production process where multiple products are derived from a single process or material, leading to separate further processing.

Joint Production Costs

Costs incurred in the process of producing two or more products simultaneously from the same raw materials or process.

Split-off Point

Refers to the stage in a production process where joint products can be recognized as separate products.