 Sometimes customers request large one-time orders at a reduced price, and management must decide whether or not to accept it. There are both qualitative issues, like if the plant has capacity to accept the order, and if accepted does it hurt regular sales, and quantitative issues, like if the incremental revenue is greater than the incremental cost. Let's look at an example. Assume 7-11 stores want to purchase 50,000 football cards for a special promotion and at a special price of 50 cents per pack. The manufacturer, CardsRS, has total production cost per pack of 80 cents. So should management accept this special order from 7-11? Well, to answer the question, we need to perform incremental analysis and identify the relevant data. So the special price of 50 cents per pack is relevant to the decision. So is the direct material cost of 15 cents per pack. So is the direct labor cost of 5 cents per pack, as is the variable overhead cost of 10 cents per pack. Here I've created a table for the incremental analysis. Incremental revenues total $25,000. Incremental variable costs total $15,000. This is because the direct material, direct labor and variable overhead total 30 cents per pack. Finally, there is not an incremental change in fixed costs, so they are irrelevant to this decision. Thus, management should accept this order because it increases operating income $10,000. What if the cards need a special hologram and a 7-11 logo? And CardsRS must buy a machine that costs $15,000 to do this. Now fixed costs have changed, increasing $15,000. Management should reject the order because this special order would cause a decrease in operating income.