Question

Which of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity? Additional fixed costs will probably be incurred. Net income will decrease. Net income will not be affected. Net income will increase if the special sales price per unit exceeds the unit variable costs.

Answer 1

Answer: Statement D

Explanation: If a company accept a special order then it must be doing so in order to gain or maximize its profits and the profits will only increase when there is an increase in net income.

Thus, statement D is correct implying that net income will increase when the sales price in greater than the variable cost.