# Special Orders In Cost Accounting

A list of special orders matching the entered criteria opens. To select the special order from the list, continue with Step6. Items that are shipped to the customer must be paid in full in the same transaction in which the order is created.

A representative of the local high school recently approached Tony to ask about a one-time special order. The high school will be hosting a statewide track and field event and is willing to pay Tony’s T-shirts \$17 per shirt to make 200 custom T-shirts for the event. Because enough idle capacity exists to handle this order, it will not affect other sales. That is, Tony has the factory space and machinery available to produce more T-shirts. Tony incurs the same variable costs of \$13 per unit to produce the special order, and he will pay a firm \$600 to design the graphics that will be printed on the shirts. This special order will have no other effect on Tony’s monthly fixed costs.

Figure 7.14 “Summary of Differential Analysis for Tony’s T-Shirts” provides an alternative presentation of differential analysis for Tony’s T-shirts. As discussed earlier in the chapter, this presentation summarizes the differential revenues and costs. Differential analysis provides a format that helps managers decide whether to accept or reject special orders, as shown in the example that follows. Special orders are a great way to order out-of-stock items for your customers. For example, a customer may want a specific item that only your location carries in stock and would be willing to wait for more quantities to arrive.

## Special Order

When the special order item arrives in the store, it is shipped to the customer or the customer is notified to pick it up at the store. Although many accounting courses do not require the use of computer spreadsheets, you are encouraged to use spreadsheet software like Excel when preparing homework or working review problems. You can also special order individual items that are out of stock during a sale by selecting Special Order from their Move To drop-down . Alternatively, you can special order all items in a sale by selecting the Special Order All button . Both these workflows move the item from the SALE tab to the SPECIAL ORDER tab. The following monthly financial data are for Quicko’s, a company that makes photocopies for its customers. On average, Quicko’s makes 100,000 copies each month.

• You can also special order individual items that are out of stock during a sale by selecting Special Order from their Move To drop-down .
• Both these workflows move the item from the SALE tab to the SPECIAL ORDER tab.
• The restaurant asks Quicko’s to produce the flyers for 7 cents a copy rather than the standard price of 8 cents.
• To select the special order from the list, continue with Step6.
• This analysis shows that Quicko’s would be better off accepting the special order because profit is \$150 higher for Alternative 2.
• Xstore Point of Service will open a prompt listing open special orders for the customer, or an indication that there are no open special orders.

The restaurant asks Quicko’s to produce the flyers for 7 cents a copy rather than the standard price of 8 cents. Quicko’s can produce up to 130,000 copies a month, so the special order will not affect regular customer sales.

## Special Order Definition

Variable costs per copy will remain at 5 cents, but production of the restaurant flyers will require a special copy machine part that costs \$250. This special order will have no other effect on monthly fixed costs. Assume Quicko’s can only produce 100,000 copies per month, and that regular customer sales would decrease as a result of the special order. Managers often use differential analysis to decide whether to accept a special one-time order made by a customer.

The second assumption is that this is a one-time order, and therefore represents a short-run pricing decision. If Tony’s T-shirts expects future orders from the high school at the \$17 per shirt price, the company must consider the impact this might have on long-run pricing with other customers. That is, regular customers may hear of this special price and demand the same price, particularly those customers who have been loyal to Tony’s T-shirts for many years. Tony’s might be forced to lower prices for regular customers, thereby eroding the company’s profits over time. The key point is that companies evaluating special orders can drop prices in the short run to cover differential variable and fixed costs. But in the long run, prices must cover all variable and fixed costs. Quicko’s is approached by a local restaurant that would like to have 20,000 flyers copied.

## Cancel A Special Order

Managers compare sales revenue and costs for each alternative , and select the alternative with the highest profit. Organizations must be careful to consider the long-run implications of reducing prices for special orders. The monthly information provided relates to the company’s routine monthly operations.

A Special Order transaction is typically performed when a customer wants to purchase an item that is not currently available in the store. The item may be out of stock or unavailable for any reason. A special order item may be any saleable item from the store’s inventory. Non-inventory items may also be special-ordered if your store policy permits it. When an item is out of stock, the customer cannot take possession of the item immediately, so the store orders it from a vendor, warehouse, or another store.

## The First Known Use Of Special Order Was

The special order is canceled and the refund amount is applied to the transaction. Use the up and down arrows to highlight the correct items, then press the Spacebar. Use the up and down arrows to select an item, then press the Spacebar to highlight it. To search for the special order, continue with Step3. To confirm that a shipping fee has been added to the special order.

## First Known Use Of Special Order

If necessary, enter the amount of the special order deposit, then press Enter. If necessary, enter the expected arrival date for the order, then press Enter. Once the format is established, the template can be used repeatedly for different scenarios.

On the thirteenth of the same month they bound to the stake, in order to burn alive, a man who had two religious in his house. At the same time, campaigns are spending less while the special-interest groups are spending more. You must — there are over 200,000 words in our free online dictionary, but you are looking for one that’s only in the Merriam-Webster Unabridged Dictionary.

## Create A Special Order

To exit special order mode and perform additional transaction processing. Button will be available to allow you to quickly look up customer addresses using minimal information. Is an extra order or an order for an item specially requested by a customer. This moves the item from the SPECIAL ORDER tab to the SALE tab. Once you create a special order, you can easily add it to a purchase order from the Special Orders submenu.

See Chapter 4, “Processing Tenders” for more information about changing items in a transaction. Use differential analysis for special order decisions. Xstore Point of Service will open a prompt listing open special orders for the customer, or an indication that there are no open special orders. Special order, non stock and drop ship items are subject to the prior approval and returned goods policy of the manufacturer. This analysis shows that Quicko’s would be better off accepting the special order because profit is \$150 higher for Alternative 2. Summarize the result of accepting the special order using the format presented in Figure 7.14 “Summary of Differential Analysis for Tony’s T-Shirts”. The expected arrival date for the item is changed.