Accounting · Cost Accounting
A firm is evaluating whether to accept a one-time special export order at a price below its normal domestic selling price. Based on the principles of marginal costing, which of the following conditions must be met for the firm to accept this order? 1. The firm must have idle capacity so that the special order does not displace regular production. 2. The price offered in the special order must exceed the marginal (variable) cost per unit to ensure a positive contribution. 3. The special order must be in a separate market or be clearly distinct so it does not affect the regular market price. 4. The price of the special order must be at least equal to the total absorption cost per unit to ensure long-term profitability. Choose the most appropriate answer from the options given below:
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