When There Is an Excess Capacity, It Makes Sense to Accept

question 169

Multiple Choice

When there is an excess capacity, it makes sense to accept a one-time-only special order for less than the current selling price if ________.

• A) incremental revenues exceed incremental costs
• B) additional fixed costs is incurred to accommodate the order
• C) the company placing the order is in the same market segment as your current customers
• D) incremental revenue equals incremental operating income

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Definitions:

Monozygotic Twins

Monozygotic twins are twins that originate from a single fertilized egg, thus sharing identical genetic material and typically having very similar appearances and physical traits.

Biological Parents

The parents who are genetically related to the child, contributing half of the child's genetic makeup each.

Metabolize

The biochemical process by which organisms convert substances into energy or materials necessary for cellular function and growth.

Taste Buds

Sensory organs located on the tongue that are responsible for perceiving different types of tastes.