Question

Excess or unused capacity are key element in a decision to accept or reject a special offer price on a product or activity what is your understanding of this concept.

Answer 1

"The statement is True "

While making decision as to offer price ,we need to consider Excess or unused capacity .If the organization has no excess capacity ,it is to be seen whether acceptance of offer results in loss of regular sales .

If such loss occurs ,then it should be considered while making decision as an opportunity cost.

However if there is excess capacity with no other alternative use ,decision should be based on other criteria