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Bert Asiago, a salesperson for Convertco, received an order from a potential new customer for 50,000 units of Convertco's single product at a price $25
Bert Asiago, a salesperson for Convertco, received an order from a potential new customer for 50,000 units of Convertco's single product at a price $25 below its regular selling price of $65. Asiago knows that Convertco has the capacity to produce this order without affecting regular sales. He has spoken to Convertco's controller. Bia Morgan, who has informed A siago that at the $40 selling price. Convertco will not be covering its variable costs of $42 for the product, and she recommends the order not be accepted. Asiago knows that variable costs include his sales commission of $4 per unit, if he accepts a $2 per unit commission, the sale will produce a contribution margin of zero. Asiago is eager to get the new customer because he be lives that this could lead to the new customer becoming a regular customer. Required Determine the contribution margin per unit on the order as determined by the controller Determine the contribution margin per unit on the order a determined by asiago if he takes the lower commission Do you recommend Convert accept the special order? What factors must management consider
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