If a firm is at full capacity,what must the minimum special order price cover?

Question

Quizplus · Accepted Answer

When a firm is at full capacity, the minimum special order price must cover the variable costs and incremental fixed costs associated with the special order plus the foregone contribution margin on regular units not produced. Option A only covers variable costs, option B covers both variable and fixed manufacturing costs, and option C only covers incremental fixed costs. Only option D includes both variable and incremental fixed costs as well as the foregone contribution margin.

If a Firm Is at Full Capacity,what Must the Minimum