In a one-time-only special order situation,if the price offered by the potential buyer is less than the absorption cost per unit,the producer should not accept the special offer.

Question

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In a one-time-only special order situation, the decision to accept the offer should be based on whether the price offered covers the variable costs and contributes to covering fixed costs and potentially generating profit. Absorption costing includes both variable and fixed costs, but fixed costs do not change with the production volume in the short term. Therefore, if the price covers variable costs, accepting the offer could still be beneficial as it contributes to fixed costs and profitability.

In a One-Time-Only Special Order Situation,if the Price Offered by the Potential