In differential costing:

A.Only variable costs can be considered

• B.Irrelevant costs must be considered
• C.Relevant costs are never considered
• D.Only relevant costs are considered

Fixed costs:

A.Are always sunk costs and should not be considered

• B.May be relevant, and considered in differential costing if they are relevant to the decision being made.
• C.Are always irrelevant, and should never be considered in any differential costing analysis.
• D.Are always sunk costs and should always be considered

Hermis, Inc. produces and sells blue pens. Each blue pen has a sale price of $1 and variable costs of $0.50. Fixed costs total $500/month. Hermis currently sells 2,000 pens per month; capacity is 2,500 pens per month. They received a one-time special order to sell 500 pens for a sale price of $0.60 per pen. They will avoid $100 in fixed costs if they accept the special order. Which costs are relevant to Hermis' decision? Select all that apply.

A.$400 unavoidable fixed costs

B.$100 avoidable fixed costs

C.Contribution margin of $0.10 per pen on special order units

D.Contribution margin of $0.50 per pen in opportunity costs