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Chavez Co. produces and sells duffel bags that are priced at $60 each. Chaves has received a request for a special order of 500 duffel
Chavez Co. produces and sells duffel bags that are priced at $60 each. Chaves has received a request for a special order of 500 duffel bags at a reduced price of $48 each. The current unit-related cost to produce a bag is $32 (direct material, $20; direct labor, $8; and unit- related overhead, $4). Fixed overhead of $350,000 consists of manufacturing overhead and selling and administrative overhead. Chavez has the capacity to produce the special order; however, one additional production run will be required costing $2,000 2. Should the order be accepted? Why or why not. What qualitative factors should Chavez consider before making this decision? a. b
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