Each month, Burrel Incorporated produces 500 units of a product that has unit variable costs of $22. Total fixed costs for the month are $4800. A special sales order is received for 200 units of the product at a price of $28 per unit. In deciding to accept or reject the special sales order, it is appropriate to consider the

Question

Quizplus · Accepted Answer

The difference between the offered price ($28) and the variable cost per unit ($22) is relevant because it directly affects the company's profitability on the special sales order. Fixed costs are not affected by the decision to accept or reject the order since they remain constant regardless of production volume.

Each Month, Burrel Incorporated Produces 500 Units of a Product