Answer (C) is correct . Granting a lower-than-normal price for a special order has potential ramifications for regular sales because other customers may demand the same price. Thus, the decision to consider differential manufacturing costs only should be based on a determination that all other costs are not relevant, that is, that these other costs do not vary with the option chosen.
Answer (A) is incorrect because The differential analysis of a special order considers total marginal costs. Thus, unit variable costs and total fixed costs need not be constant, and any changes need not be in direct proportion to the measure of activity.
Answer (B) is incorrect because The assumption is that selling and administrative costs are not relevant.
Answer (D) is incorrect because The assumption is that acceptance of the order will not cause total selling and administrative costs to change.
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