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Delta Screen Corporation is currently operating at 60% of capacity and producing 6,000 screens annually. The normal selling price is $750 per screen. They recently
Delta Screen Corporation is currently operating at 60% of capacity and producing 6,000 screens annually. The normal selling price is $750 per screen. They recently received an offer from a company in Germany to purchase 2,000 screens for $500 per unit. The order must be taken in its entirety or not at all. Delta has not previously sold products in Germany. Budgeted production costs for 6,000 and 8,000 screens follow: Delta's marketing manager believes that although the price offered by the German customer is lower than current price, the order should be accepted to gain a foothold in the German market. The production manager, however, believes that the order should be rejected because the unit cost is higher than the price offered. 1) What is the variable cost of producing one screen? 2) If the president of Delta the companyre to call on you to resolve the difference in opinion, what would you recommend? What non-financial considerations should be included in your analysis? 3) What if Delta is operating at capacity? 4) What if Delta is operating at 9,000 units? What other items should they consider
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