Variable costs are always relevant. Ignore the fixed portion only. The question could be slightly better worded by saying. "no ADDITIONAL selling expenses". $12.5O will be incurred on every unit regardless of whether our customer is an existing or new customer.
Why would you not take out the total selling expenses of $25.00 when the problem say no selling expenses would be incurred on the the special order.
Variable costs are always relevant. Ignore the fixed portion only. The question could be slightly better worded by saying. "no ADDITIONAL selling expenses". $12.5O will be incurred on every unit regardless of whether our customer is an existing or new customer.