Answered: Which of the following factor is…

Business

Accounting

Which of the following factor is irrelevant regarding a special order

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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Question

26. Which of the following factor is irrelevant regarding a special order?

a.The unused capacity of the plant that is used for the special order

b.The labor costs for the special order

c.The fixed overhead that can be avoided if the special order is not taken up

d.The additional revenue from the special order

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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