Last year when Ineptus Company had excess capacity in the production of its golf umbrellas, it accepted

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Last year when Ineptus Company had excess capacity in the production of its golf umbrellas, it accepted a special order from Taekem Company for 50,000 umbrellas at $3 below its normal selling price. Normal capacity is 120,000 units and the normal selling price is $14 per unit. The company is now operating near full capacity at an average of 100,000 units per month. Taekem Company has just indicated that it would like to buy the umbrellas on a regular basis at 25,000 units per month at the same price it paid last year. How could Ineptus justify selling the umbrellas at less than the normal price? Should the company accept Taekem's offer? What justification can management provide for wanting its regular price for the umbrellas?

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Cost Accounting

ISBN: 9780538817646

2nd Edition

Authors: Les Heitger, Pekin Ogan, Serge Matulich

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