If regular sales are given up in order to accept a special order, the lost contribution margin on the regular sales must be subtracted from the contribution margin of the special order to arrive at the total impact on operating income.

Question

Quizplus · Accepted Answer

This is because if regular sales are given up, there is a loss of contribution margin from those sales. This lost contribution margin needs to be taken into account when calculating the impact on operating income of accepting a special order.

If Regular Sales Are Given Up in Order to Accept