When making short-term decisions whether to accept special orders at reduced prices, the most relevant factor is:Group of answer choicesnone of the options are relevant.fixed costs.variable costs.existence of spare capacity.
Question
When making short-term decisions whether to accept special orders at reduced prices, the most relevant factor is:Group of answer choicesnone of the options are relevant.fixed costs.variable costs.existence of spare capacity.
Solution
When making short-term decisions whether to accept special orders at reduced prices, the most relevant factor is the existence of spare capacity.
Here's why:
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Assessing Spare Capacity: Before accepting any special orders at reduced prices, it's crucial to determine whether you have enough spare capacity to fulfill these orders without disrupting your regular operations. If you don't have enough spare capacity, you may need to incur additional costs to increase your production capacity, which could offset the benefits of the special order.
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Considering Variable Costs: Variable costs are also relevant because
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