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Chart · Break-Even

Incremental Order Decision Reference

See how setup expense and displaced contribution change a special order result and minimum offer price across five capacity scenarios.

By PriceAndProfit Editorial Updated

The table compares accepting an additional 200-unit order with declining it. Every scenario uses an $18 offer and an $11 incremental unit cost. The order therefore supplies $1,400 before any additional setup or displaced work. Existing unavoidable fixed overhead is outside this decision bridge; it still belongs in the overall business profit budget. All figures are hypothetical and the capacity assumptions must be checked separately.

Incremental result = 200 × ($18 − $11) − added setup − displaced contribution
Hypothetical inputs and independently checked arithmetic
Added setupDisplaced contributionIncremental resultMinimum offer per unit
$0 $0 $1,400 $11.00
$500 $0 $900 $13.50
$500 $300 $600 $15.00
$500 $900 $0 $18.00
$500 $1,000 −$100 $18.50

Interpret the result

The fourth row reaches zero incremental profit, while the fifth loses $100 compared with declining the order. That result is not the company's total net profit. Displaced contribution represents the earnings forgone on other orders, after their avoidable costs; using displaced revenue would exaggerate the sacrifice. The minimum price is a cost threshold, not evidence of the customer's willingness to pay.

Check before applying the example

Confirm delivery capacity, required setup and any genuinely forgone work before choosing a row. Do not subtract an opportunity cost again in the cash-payment schedule unless it also creates an actual payment. If the order adds equipment or a staffing commitment, include the relevant additional cost rather than an unrelated allocated overhead rate.

Use your own inputs

The calculator uses the same stated decision boundary.

Method reference: OpenStax: Special Order Decisions. Checked October 22, 2026. Incremental cost and capacity concepts only; no legal pricing rules or market prices are asserted.

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