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ACCEPTANCE OR NOT OF A NEW ORDER As an electronical devices manufacturer, company's marketing manager is thinking about a new job order which may
ACCEPTANCE OR NOT OF A NEW ORDER As an electronical devices manufacturer, company's marketing manager is thinking about a new job order which may be given by a governmental body. This new order covers 50.000 pieces of smart calculator and is totally well matched with the normal manufacturing processes of the business. Normally the market price of the business for these types of devices is 175$. Monthly capacity of the business is 400.000 pieces for these types of devices but only 75% of the capacity can be realized. It is detected that the competitors in the market are selling the same devices between 130$ and 145$ and the governmental body is proposing 125$ FOB per device. Considering the periodical financial data given below; 1. Discuss the proposal of the governmental body is acceptable or not. 2. If the objective of the business is to profit 15% of the current assets in the balance sheet which is 35.000.000$, how much should be the price of a device proposed this body? 3. Discuss the other conditions concerning the acceptance of the order. Cost Elements Direct Material Standard Level Budget Actual Level Budget 18.000.000 $ 13.500.000 $ Direct Labor 10.000.000 $ 7.500.000 $ Indirect Labor 6.000.000 $ 4.500.000 $ Heating, Energy 3.600.000 $ 2.800.000 $ Inspection 7.000.000 $ 5.500.000 $ Depreciation 4.000.000 $ 4.000.000 $ Engineering 2.000.000 $ 2.000.000 $ Sale Commissions 2.800.000 $ 2.100.000 $ Packaging Costs 2.000.000 $ 1.500.000 $ Carrying Costs 2.000.000 $ 1.500.000 $ Bureau Expenses 1.500.000 $ 1.500.000 $ Advertisement Exp. 2.200.000 $ 1.900.000 $ Miscellaneous Exp. 600.000 $ 600.000 $
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