Davis Driveways, Inc. (DDI) pours concrete driveways for single family homes. DDI uses a cost-plus pricing approach. The companys accountant prepared the following report showing how DDI established the price per driveway at $350.

A new builder in town, Rachel Rodgers, has acquired a large tract of land upon which she intends to build 200 single family homes. Ms. Rodgers offers to purchase all 200 driveways from DDI. However, she is willing to pay only $250 per driveway.

Required

Assume your group is a management team responsible for deciding whether to accept or reject Ms. Rodgers offer. Develop a response & support your decision with appropriate computations.