The Minimum Selling Price That Should Be Acceptable in a Special

question 86

Multiple Choice

The minimum selling price that should be acceptable in a special order situation is equal to total

• A)production cost.
• B)variable production cost.
• C)variable costs and avoidable fixed costs.
• D)production cost plus a normal profit margin.

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit sold contributes to fixed costs and profit.

Variable Costs

Expenses that fluctuate in proportion to the activity or quantity of goods produced.

Operating Income

Earnings before interest and taxes, representing the profit from a company's core business operations.

Unit Selling Price

The amount of money charged to the customer for each individual unit of a product or service.