A company should
A) not accept a special order for its product for less than its regular unit selling price.
B) not accept a special order if it must incur additional fixed costs.
C) determine if the differential revenues are greater than the differential costs in order to accept the special order, even if the special-order price is lower than its regular unit selling price.
D) always exclude fixed costs in determining whether to accept or reject a special order since they are not relevant and do not change.

Question

Quizplus · Accepted Answer

A company should consider accepting a special order if the differential revenues (additional income from the order) exceed the differential costs (additional costs incurred), even if the special-order price is lower than the regular price, as long as it contributes positively to covering fixed costs and generating profit.

A Company Should