When There Is Excess Capacity,it Makes Sense to Accept a One-Time-Only

question 129

Multiple Choice

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

• A)it never makes sense.
• B)the company placing the order is in the same market segment as your current customers.
• C)incremental revenues exceed incremental costs.
• D)additional fixed costs must be incurred to accommodate the order.

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Definitions:

Close Corporations

A type of business structure where the number of shareholders is limited, and stock is not publicly traded, often managed in a hands-on manner by its owners.

Fiduciaries

Individuals, organizations, or entities that hold a position of trust and are required to act in the best interest of another party, such as a trustee or financial advisor.

Shareholders

Individuals or entities that own shares in a corporation, thereby having a financial interest in its performance and governance.

Dissenters' Rights

Legal provisions that allow shareholders to demand the corporation buy back their shares at a fair value if they do not agree with certain fundamental changes.