when evaluating a special order, management should:\nmultiple choice\nonly accept the order if the special…
when evaluating a special order, management should:\nmultiple choice\nonly accept the order if the special - order price exceeds all product costs.\nonly accept the order if the special - order price exceeds fixed product costs.\nonly accept the order if the special - order price exceeds total variable product costs.\nonly accept the order if the special - order price exceeds full absorption product costs.\nonly accept the order if the special - order price exceeds regular sales revenue.
Answer
Brief Explanations:
When evaluating a special order, fixed costs are often sunk (already incurred and not affected by the special - order decision in the short - run). The key is to cover variable costs. If the special - order price exceeds total variable product costs, it contributes to covering fixed costs (which are already there in the short - run) and potentially adds to profit.
Answer:
Only accept the order if the special - order price exceeds total variable product costs.