This is when businesses need to decide if to accept orders that are on special terms

Prices lower than normal – if the contribution is positive generally accept the order

However have to consider:

- If more Fixed Costs result from the order

- May the order increase the level of Variable Costs

- If the company will resell the product

- If it may lead to future sales – if this is the case may accept an order that doesn’t make a positive contribution

 Prices higher than normal

Normally would accept this

However if specifications have to be altered it may prove to be expensive for the business

The firm would need to:

- Calculate any extra variable costs associated with the order

- Assess if sufficient capacity to meet order

- Decide if it increases contribution and profits