If a company has excess capacity, it is contemplating whether a special order should be accepted. Theorder will not impact regular sales. If the company accepts the special order, what will occur?Incremental costs will not be affectedThere are no incremental revenues.O Net income will increase if the special sales price per unit exceeds the unit variable costs,Both foxed and variable costs will increase.

Special order means the new order which the entity can produce within the available production…

Answered: If a company has excess capacity, it is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please help me with this accounting homework question, I am having so much trouble.
Refer to the information for Smooth Move Company on the previous page. If SmoothMove accepts the order, no fixed manufacturing activities will be affected because there issufficient excess capacity.Required:1. What are the alternatives for Smooth Move?2. CONCEPTUAL CONNECTION Should Smooth Move accept the special order? By howmuch will profit increase or decrease if the order is accepted?3. CONCEPTUAL CONNECTION Briefly explain the significance of the statement in theexercise that “existing sales will not be affected” (by the special sale).
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