In Deciding Whether or Not to Accept a Special Order,what

question 34

Multiple Choice

In deciding whether or not to accept a special order,what is the opportunity cost of using machinery for which the firm has sufficient excess capacity to accept the order?

• A)The historical cost of the machinery
• B)The undepreciated cost of the machinery
• C)The same machinery cost allocated to regular production orders
• D)Zero

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Definitions:

Compete

To strive against others for the purpose of achieving a goal, such as winning a market share or achieving a business objective.

Strategic

Pertaining to the identification, planning, and execution of actions designed to achieve long-term goals and objectives.

Purchasing

The process of obtaining goods or services, typically for business purposes, from an external source.

Make-Or-Buy Decision

The choice between producing a component or a service and purchasing it from an outside source.