Question

Firms are more likely to accept a special order for one of their products at a reduced price if?

Answer 1

Firms are more likely to accept a special order for one of their products at a reduced price if "excess capacity exists."

What are special order?

The special order would be a purchase that the business did not plan for while creating its annual budget. This presents an additional chance to exceed sales targets in terms of revenue.

Some key points regarding the special order are-

• Special orders frequently ask for a reduced price than what is usually provided and/or can incur additional expenses.
• Students frequently wish to ignore the order right away because of the cheaper price or lesser contribution margin.
• However, the purchase should be taken into consideration if it will result in more profit.
• Keep in mind that only a special order is one the business did not anticipate.
• The business must make sure there is extra capacity available to fulfill this request without jeopardizing the year's initial development plan.
• The consumer who requests the special order must not compete with current customers or the business, since this could lead to a decline in sales at regular pricing.

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