In a One-Time Special Order Situation, If the Price Offered

question 130

True/False

In a one-time special order situation, if the price offered by the buyer is less than the absorption cost per unit, the special order may still be profitable since absorption costs include allocated fixed manufacturing overhead.

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Definitions:

Actual Total Labour Cost

The actual amount spent on wages and salaries for employees directly involved in the production process.

Actual Hours

The real number of hours worked or spent on a specific task, project, or production process.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the product’s cost.