In Making a Decision About Whether or Not to Fill

question 67

Multiple Choice

In making a decision about whether or not to fill a special order, fixed costs that are incurred regardless of whether the order is accepted should:

• A) Be considered because they help to reduce net income
• B) Be considered because they cannot be avoided
• C) Not be considered because they will be incurred whether or not the order is accepted
• D) None of these are correct

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Definitions:

Coincidence of Wants

A situation in a barter system where two parties each have something the other wants, facilitating an exchange without the need for money.

Total Output

The total quantity of goods and services produced by an economy, sector, or individual producer over a specified period.

Coincidence-of-Wants Problem

Refers to the difficulty in barter transactions where each party needs to have what the other wants and be willing to trade for it simultaneously.

Trade by Barter

The exchange of goods or services between parties without the use of money as a medium of exchange.