If regular sales are given up to take 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.

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This statement is true. Contribution margin is the amount that each unit contributes to covering fixed costs and generating profit. When a company decides to take a special order and gives up regular sales, it is important to consider the lost contribution margin from the regular sales when analyzing the impact on operating income. This helps to determine whether the special order will ultimately be profitable or not.

If Regular Sales Are Given Up to Take a Special