A Special Order Generally Should Be Accepted If

question 65

Multiple Choice

A special order generally should be accepted if:

• A) its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order.
• B) excess capacity exists and the revenue exceeds all variable costs associated with the order.
• C) excess capacity exists and the revenue exceeds allocated fixed costs.
• D) the revenue exceeds total costs, regardless of available capacity.
• E) the revenue exceeds variable costs, regardless of available capacity.

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Definitions:

Quantity Supplied

Quantity supplied refers to the total amount of a good or service that producers are willing and able to sell at a given price over a specific time period.

Price Ceiling

A legal maximum price that can be charged for a good or service, set by government regulation.

Rationing Process

A system of allocating goods and services when demand exceeds supply, often through mechanisms other than price.

Market Price

The price at which a good or service is bought and sold in a marketplace, determined by the supply and demand dynamics of that market.