Since fixed costs remain constant in the short run,special orders should be accepted as long as the order price is greater than the variable costs.

Fixed Costs

Outgoings such as rent, salaries, and premiums for insurance that are unaffected by the quantity of sales or production.

Special Orders

Custom orders that typically differ from standard products and may have unique pricing or production requirements.

Variable Costs

Expenses that fluctuate in direct proportion to production or sales figures, like direct labor and raw materials.