Which of the Following Is NOT a Major Consideration When

question 71

Multiple Choice

Which of the following is NOT a major consideration when analyzing a special order?

• A) Will the price be high enough to cover any incremental costs to fill the order?
• B) Does the company have excess capacity available?
• C) Will the profit margin of the special sale be as high as regular sales?
• D) Will the special order negatively impact regular sales?

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Definitions:

Volume-Based Allocation

A method of distributing resources, costs, or revenues proportionally based on the volume of goods produced or services rendered.

Product Costing

The process of determining the total cost involved in producing a product, including raw material, labor, and overhead costs.

Cost Control

Cost control involves the practice of identifying and reducing business expenses to increase profits, maintaining quality and efficiency in the process.

Overhead Costs

General business expenses not directly tied to producing a product or service, such as rent, utilities, and insurance.