Pitt Company produces oak lumber that the company sells to furniture produces. A new customer has...

Transcribed Image Text:

Pitt Company produces oak lumber that the company sells to furniture produces. A new customer has approached Pitt Company looking to purchase a special load of lumber. The customer has requested 1,500,000 metres of boards for a total of $7,182,000. To complete the order, Pitt Company will require half of the company's total monthly capacity. Total fixed costs per month will be $3,000,000 and variable costs are $3,750 per batch produced in which each batch contains 1,000 metres of boards. Required (A) Assuming Pitt Company has sufficient capacity for the order, should the company accept the order? (B) What is the minimum price per batch that Pitt Company would need to charge to accept the special order? Pitt Company produces oak lumber that the company sells to furniture produces. A new customer has approached Pitt Company looking to purchase a special load of lumber. The customer has requested 1,500,000 metres of boards for a total of $7,182,000. To complete the order, Pitt Company will require half of the company's total monthly capacity. Total fixed costs per month will be $3,000,000 and variable costs are $3,750 per batch produced in which each batch contains 1,000 metres of boards. Required (A) Assuming Pitt Company has sufficient capacity for the order, should the company accept the order? (B) What is the minimum price per batch that Pitt Company would need to charge to accept the special order?