Special Order Pricing - Accounting

The video tutorial discusses special order pricing, a scenario where a customer requests a price lower than the normal sales price. It explores the reasons a company might accept such an order, including utilizing extra production capacity. The tutorial also highlights qualitative considerations, such as the precedent set for future orders and the reaction of regular customers. An example is provided where a company evaluates a special order for widgets, initially appearing as a loss but ultimately showing a gain when fixed costs are excluded. The tutorial emphasizes the importance of understanding relevant costs in decision-making.

How does the fixed overhead cost affect the decision to accept the special order?

What was the final conclusion regarding the acceptance of the special order for 5000 widgets?