When there is limited capacity, the minimum acceptable price for a "special sales order" should equal the ________ from the product that is sacrificed plus the incremental costs of the product being produced.
A) Selling price
B) Full cost
C) Variable cost
D) Contribution margin
E) Gross profit

Question

When there is limited capacity, the minimum acceptable price for a "special sales order" should equal the ________ from the product that is sacrificed plus the incremental costs of the product being produced.
A) Selling price 
B) Full cost 
C) Variable cost 
D) Contribution margin 
E) Gross profit

Quizplus · Accepted Answer

The minimum acceptable price for a "special sales order" should at least cover the opportunity cost of producing the product being sacrificed, which is the contribution margin. In addition, the incremental costs of the product being produced should also be considered. Therefore, the best choice is D) Contribution margin.

When There Is Limited Capacity, the Minimum Acceptable Price for a "Special