Which factor below needs to be considered when deciding whether to undertake a special order at a reduced price?

Question

BlackTom AI · Accepted Answer

Special-order decisions focus on relevant (incremental) costs and benefits: variable costs determine the minimum acceptable price, capacity and opportunity costs determine whether regular sales are displaced, and customer-relations/pricing effects determine longer-run consequences.

1. Relevant knowledge points and concepts
- Incremental (relevant) costs: only additional variable costs and any additional fixed costs caused by the special order matter for the short-run accept/reject choice. Contribution margin = Special-order price − Variable cost per unit.  
- Opportunity cost: if accepting the order uses scarce capacity that could have produced regular sales, the forgone contribution from those regular sales is an opportunity cost and must be included.  
- Customer effects: selling below list price can anger existing customers, create expectations of lower prices, or damage brand image; these are qualitative but economically important.

2. Step-by-step reasoning
- Compute incremental contribution: if price > variable cost, the order contributes toward fixed costs and profit; if price < variable cost, it reduces profit.  
- Check capacity: if there is idle capacity, incremental contribution is pure benefit; if capacity is constrained, calculate the contribution lost by displacing regular orders.  
- Assess customer/market impacts: consider whether the special price will leak to regular customers, foster resentment, or require contractual protections (e.g., confidentiality, limited-run).

3. Calculations (general form)
- Contribution per unit = Special-order price − Variable cost per unit.  
- Net benefit if idle capacity = Contribution per unit × Quantity.  
- Net benefit if displacing regular sales = (Contribution_special − Contribution_regular) × Quantity (or negative if special displaces higher-margin sales).

4. Why the correct answer is correct
Each listed factor affects the incremental profit or long-term value of the special order. Ignoring any one—contribution to fixed costs, opportunity cost of forgone regular sales, or effect on existing customers—can lead to a wrong decision.

5. Why the other options alone are incomplete
Each individual option identifies a true consideration, but none alone captures the full decision context: contribution matters for short-run profitability, opportunity cost matters when capacity is scarce, and customer effects matter for long-term consequences. Only the combined consideration is sufficient.

6. Conclusion
Therefore, all of the options should be considered. This confirms the provided correct answer: "All of the options should be considered."

Which factor below needs to be considered when deciding whether to undertake a special order at a reduced price?单项选择题

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