when evaluating a special order, management should: multiple choice only accept the order if the special…
when evaluating a special order, management should: multiple choice only accept the order if the special - order price exceeds all product costs. only accept the order if the special - order price exceeds fixed product costs. only accept the order if the special - order price exceeds total variable product costs. only accept the order if the special - order price exceeds full absorption product costs. only accept the order if the special - order price exceeds regular sales revenue.
Answer
Brief Explanations:
When evaluating a special order, relevant costs are considered. Fixed costs are often not relevant as they do not change with the special - order volume (assuming capacity is available). The key is to cover variable product costs. If the special - order price exceeds total variable product costs, it contributes to covering fixed costs (already incurred in the short - run for existing production) and potentially adds to profit.
Answer:
Only accept the order if the special - order price exceeds total variable product costs.