Browse MBAs SECTION 2: Managerial & Cost Accounting

The Special Order Decision

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The Special Order Decision

Should we accept this one-off order below our normal price? Analyse it.

Normal price: [AMOUNT]  Offered price: [AMOUNT]  Quantity: [UNITS]
Variable cost per unit: [AMOUNT]
Current capacity situation: [SPARE CAPACITY / AT CAPACITY / NEED TO ADD
CAPACITY]
Any incremental costs of this order: [DESCRIBE]

Analyse:
1. The incremental profit or loss on the order itself
2. Whether we have the capacity, and the opportunity cost if we don't
3. The risk to existing customers and pricing if this gets out
4. Any long-term consequence of setting this precedent
5. A clear accept/decline with the conditions I'd attach

Separate the short-term maths from the strategic risk — both matter.

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