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3. Report 1) Should Lambda Inc. accept the special order? Based on the estimated financial impact of the special order on the master budget,
3. Report 1) Should Lambda Inc. accept the special order? Based on the estimated financial impact of the special order on the master budget, determine whether Lambda Inc. should accept the special order. Assume that the special order also follows a cash collection schedule identical to that of regular orders under the annual contract. 2) The buyer asks Lambda Inc. whether the special order price can go lower. The buyer wants to minimize the required capital for a massive sales and promotion campaign, which is essentially the material cost of Z350 to the buyer. The buyer proposes to share some of the excess profits from the event. The share for suppliers will be proportional to the cost-saving each supplier can provide to the buyer by participating in the special order. Lambda Inc., considering the proposal, wants to gather accounting information to help decision-making. Lambda Inc. wants to set a low price to increase the expected profit from the profit-sharing as long as the selling price is high enough to avoid a loss in the special order. What is the lowest possible price Lambda Inc. can set for the special order? Use the information available in the base and the alternative budgets.
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