Clinical Services imports and sells surgical instrument kits to hospitals at a price of \($150\) per kit. The cost of each kit is \($85.\) Average sales per month are 1,000 kits, which results in the following profit:

The national Hospital Purchasing Authority is negotiating with Clinical Services to reduce its selling price by 20%, promising to buy at least 1,200 kits per month. Should Clinical Services accept this offer? If so, why? If not, what would be your suggestion in order for Clinical Services to maintain its current level of profitability?

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Sales 1,000 @ $150 $150,000 Cost of goods sold 1,000 @ $85 85,000 Gross profit 65,000 Fixed costs 50,000 Net profit $15,000