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Boffin Ltd makes childrens' chemistry sets. Boffin has a capacity of 10,000 sets per year. Due to falling demand, towards the end of the year,
Boffin Ltd makes childrens' chemistry sets. Boffin has a capacity of 10,000 sets per year. Due to falling demand, towards the end of the year, they only expect to produce 9,000 sets this year. The normal retail price is $199. Cost data per set for production at capacity is: - Prime Cost: $80 - Variable Manu O/H: $20 - Fixed Manu O/H: $15 A large local school approaches Boffin and offers $110 per set for 500 sets Based on (short-term) financial factors alone, should Boffin accept? What other factors may influence the decision?
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