In a one-time special order situation, if the price offered by the buyer is less than the absorption cost per unit, the special order may still be profitable since absorption costs include allocated fixed manufacturing overhead.

Question

Quizplus · Accepted Answer

Absorption costing includes fixed manufacturing overhead as part of the per-unit cost. This means that even if the price offered by the buyer is lower than the variable cost per unit, the special order may still contribute to covering the fixed costs and therefore be profitable.

In a One-Time Special Order Situation, If the Price Offered