Accounting · Marginal Costing
A company produces 10,000 units at a variable cost of ₹40 per unit. The fixed cost is ₹2,00,000. The company receives a special order for 2,000 units at ₹45 per unit, and there is idle capacity available. The normal selling price is ₹70. From a financial perspective, what should the company do?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Accept only if the price covers the fixed cost proportionately
- 2Reject, as it reduces the overall profit percentage of the company
- 3Accept, as the contribution per unit is positive and it increases total profit✓
- 4Reject, as the special price is below the total cost per unit
Correct answer
Accept, as the contribution per unit is positive and it increases total profit
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