If there is excess capacity, the minimum acceptable price for a special order must cover
A)only variable costs associated with the special order.
B)variable and fixed manufacturing costs associated with the special order.
C)variable and incremental fixed costs associated with the special order.
D)variable costs and incremental fixed costs associated with the special order, plus the contribution margin usually earned on regular units.

Question

Quizplus · Accepted Answer

Variable and incremental fixed costs associated with the special order are the minimum acceptable price because these costs must be covered in order for the company to not lose money on the special order.

If There Is Excess Capacity, the Minimum Acceptable Price for a Special