Which of the following statements regarding special orders is (are) false? (A) T

Question

Which of the following statements regarding special orders is (are) false?

(A) The primary decision for special orders is determining whether the differential revenue is greater than
the differential costs associated with the order.

(B) The differential analysis approach to pricing for special orders will always lead to under pricing in the long-run because fixed costs are not included in the analysis.

Only A.

Only B.

Neither A nor B is false.

Both A and B are false.

(A) The primary decision for special orders is determining whether the differential revenue is greater than
the differential costs associated with the order.

Explanation / Answer

Answer is Nether A nor B is False.

> A. If we have incremental net income only we accept special order.

> B. If we accept Special Order we will not consider Fixed Cost because it as already recovered from normal sales

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