involve determining whether or not a special order from a customer should be accepted. From a business perspective, customers often approach a company and ask to buy a specified quantity of product at a specified price.
Sometimes the customer will request modifications to the product as well, such as a special logo. This type of decision is usually a one-time order that will not impact the supplier’s regular sales. Before considered a special order, the company must have idle capacity, i.e., it should have the ability to complete the special order without expanding its operations. In other words, it must have resources that can be used to fulfill the order.
The special order decision is based on the difference between incremental revenue and the incremental costs.unless qualitative characteristics overwhelmingly impact the decision.