Question
Company A usually produces 82,000 of a product, but this year indications are they are only going to sell 65,000 products. Sales price is $
Company A usually produces 82,000 of a product, but this year indications are they are only going to sell 65,000 products. Sales price is $ 12. Cost to produce the item is Direct materials Direct labor Variable overhead Fixed overhead Total 3.10 2.25 1.15 1.80 8.30 A new vendor has contacted them and is willing to buy 15,000 items at $7 each. If Company A accepts the offer they will not have to charge the vendor any fixed overhead a) Should the company accept the offer? How do Company A's existing customers react to the price differential if the existing customer discover about the price difference, Same information as above except the new vendor wants to put a special logo on the product. The machine for the logo costs $ 5,200 and direct materials will now be $ 3.30 b) should the company accept the offer
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