Light - up Ltd is a manufacturer of contemporary marble base floor lamps which are sold for
Question:
Lightup Ltd is a manufacturer of contemporary marble base floor lamps which are sold for $ per unit. This price does not include a light bulb. The firm has capacity to produce lamps per month and is currently operating at capacity. The cost to produce each floor lamp includes:
Direct materials per unit $
Direct labour per unit $
Variable overhead per unit $
Fixed overhead per unit $
Lightup currently sources its marble from a sustainably certified firm which has worked to manage its water and energy usage and their capacity to reuse wasted marble.
A hotel chain has recently approached Lightup with an enquiry to purchase lamps for a new hotel fitout. These lamps will need to be delivered in the next month. From initial discussions with the hotel chain, the following has become clear:
The hotel has a preference for lamps which use marble from a supplier that Lightup has not worked with before. This marble will be $ cheaper per unit than the marble that Lightup currently uses. If the special order goes ahead, Lightup will need to send one of its managers to meet with this new supplier and review the supplier's environmental and quality controls. The cost of this trip is estimated to be $
The hotel is willing to pay $ per lamp, inclusive of a light bulb.
The hotel wants Lightup to provide a light bulb in each lamp. Each light bulb will cost Lightup $
Required:
Evaluate whether this proposal is acceptable on financial grounds. Ensure that your answer is discussed and supported by relevant calculationsworkings
Based on a consideration of financial, environmental and other factors, discuss whether this proposal is acceptable.
Applied Calculus
ISBN: 9781119275565
6th Edition
Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum,