Accounting › Section W · Short-term decision making › Topic W.2
Accepting or rejecting a special order
A customer offers to buy a large batch at a price below your usual one. Whether that is a bargain or a mistake depends on one question above all: is there spare capacity to make the extra units?
In this topic
- What a special order is
- Start with capacity
- The rule when there is spare capacity
- The full-cost trap
- Worked example: spare capacity at Saltash Kayaks
- When the plant is already busy
- Worked example: when the plant is nearly full
- Qualitative factors
- Legal limits on price differences
- Common mistakes to avoid
- Key takeaways
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