Question
c.On March 1, a contract offer is made to Hospital Supply by the federal government tosupply 500 units to Veterans Administration hospitals for delivery by
c.On March 1, a contract offer is made to Hospital Supply by the federal government tosupply 500 units to Veterans Administration hospitals for delivery by March 3 1.Because of an unusually large number of rush orders from their regular customers,Hospital Supply plans to produce 4,000 units during March, which will use all availablecapacity. If the government order is accepted, 500 units normally sold to regularcustomers would be lost to a competitor. The contract given by the government wouldreimburse the government's share of March manufacturing costs, plus pay a fixed fee(profit) of $50,000. (There would be no variable marketing costs incurred on thegovernment's units.) What impact would accepting the government contract have onMarch income
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