special orders

Question 1

What is a special order

Answer 1

An order that differ from regular orders in terms of the profile difference is often based on the price paid, quantity ordered or the lead time

Question 2

What may a special order depend on

Answer 2

potential immediate or futute quantitive or qualitative benefits or assessing there current capacity levels to meet new order

Question 3

What is the quantitative measure on wether to take a special order

Answer 3

calculating the contribution(amount of each item sold that contributes towards paying other costs of the business)

Question 4

Calculation for contribution

Answer 4

selling price per unit-variable costs

Question 5

Other factors of wether or not to accept special order

Answer 5

Capacity- does business have spare capacity to accept order?Does business need to invest it tech to increase capacity
Labour demands- completed in normal hours or overtime needed=high labour costs per unit
Future orders-could it lead to a more regular order
Existing customer-will it upset existing customers who pay higher prices
Product adjustment-different in product means training and chaning production process may be required