Asked by Paula marques on Jul 05, 2024
Verified
When deciding whether to accept a special order, spare or idle capacity is not a factor that needs to be taken into account.
Special Order
A one-time customer order for a product or service, often requiring a unique set of specifications or considerations outside regular offerings.
Idle Capacity
Unused or underused production capability, which occurs when a business has more resources available than is required to maintain its current level of production.
- Comprehend the significance of taking into account opportunity costs when making decisions.
Verified Answer
KD
Kaaona DegnerJul 08, 2024
Final Answer :
False
Explanation :
Spare or idle capacity is a crucial factor that needs to be considered when deciding whether to accept a special order, as it represents potential revenue that could offset the cost of accepting the order. If there is enough spare or idle capacity to fulfill the order without incurring additional costs, accepting the order may be profitable.
Learning Objectives
- Comprehend the significance of taking into account opportunity costs when making decisions.