This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: iii. Sell product s or process them further. iv. Retain or replace equipment v. Eliminate an unprofitable business segment. b. Accept an order at a special price i. If additional units can be produced within existing plant capacity, then the special order will not increase fixed costs. ii. We assume that the sales of the product(s) in other markets would not be affected by this special order. iii. If a company is operating at full capacity , a special order would most likely be rejected. c. Make or Buy Component Parts i. Remember that all fixed costs may not be avoided when outsourcing. ii. Opportunity Cost : must be considered if the productive capacity to make a component that will be bought can be used in some other manner. This cost is added to the costs associated with deciding to make the component as opposed to buying it. d. Sell or Process Further (sell unfinished/ i....
View Full Document
- Spring '08