At present, Brackley Co.'s marketing and sales activities are only in

Ontario and western Quebec.

A grocery chain in Manitoba has asked them to supply 50,000 pies

per month at a price of $2 per pie. The marketing manager thinks that the

company should refuse the contract because $2 is so far below its normal

selling price of $3. The production manager thinks that the company

should accept the order as there is spare capacity in the plant, and the

variable selling costs (delivery and commission) would not be incurred in

respect of this order.

Required

(a)

Should Brackley Co. accept the order or not?

(b)

If Brackley Co. had no spare capacity in the plant, would the

answer be the same?

(c)

If Brackley Co.'s spare capacity is 25,000 pies per month, what

would be the minimum selling price for Brackley Co. to accept the

order of 50,000 pies per month from the Manitoba grocery chain?