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SILVERSIX ConsultantTax & Business Advisory
Finance / CMA · Decision

Marginal Costing Decision

Use contribution and relevant costs to decide a make-or-buy or a special-order acceptance.

Inputs (per unit unless noted)

Decision

Working

Decision aid. Make-or-buy compares the variable cost to make plus unavoidable fixed cost against the buy price; only relevant (avoidable) costs matter. A special order is worth accepting if its price exceeds the variable cost and the extra contribution covers any additional fixed cost — assuming spare capacity and no impact on regular sales. Confirm capacity.