Question
A company that manufactures facial towels has the capacity to produce 48,000 towels per month. The current monthly production is 30,000 towels. As a result
A company that manufactures facial towels has the capacity to produce 48,000 towels per month. The current monthly production is 30,000 towels. As a result of a company strike at its current towel supplier, Aldaba, a luxury hotel chain, has offered to purchase 5,000 towels from the company at $51 per towel. The selling price is normally $62 and the unit variable cost is 38. The monthly fixed costs are $32,000. Should the company accept Aldaba's special request? Support your answer with the necessary calculations. If you accept the special request, how much would the total contribution margin be?
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