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Martin Company has a unit cost of $8 for a light fixture and expects to produce only 180,000 units due to a depressed market. A customer has offered to buy 100,000 fixtures at $7 each, which would cover direct costs without incurring variable selling costs. Accepting the order would provide additional revenue despite being below the normal selling price, as it would help utilize excess capacity and contribute to fixed costs.

Author

Dwi Ayu Siti Hartinah

Language

EN