Special orders Flashcards
What is a special order?
Special or non standard orders are requests to a business to supply a product or service does not match their normal provision
What is an example of a special order?
One of orders or requests
Selling at a lower price
How to analyse whether doing a special order is profitable?
Work out the contribution of the special order
If possible identify if the business has broken even
IF Positive cost per unit(CPU) it can be used for fixed costs or profits
IMPORTANT!!!!!!!
CONSIDERATION IS NEEDED OF OTHER QUALITATIVE FACTORS
e.g. IF INCREASING UNITS MAKES GREATER PROFITS MAY HAVE HIDDEN FEES SUCH AS INCREASE IN FIXED COSTS
What impacts Special orders?
Capacity
Cost implications (Additional E.g. more fixed cost)
Impact on established customers
Potential profitability of the order
Brand Reputation
