FoxxCon Industries is a manufacturer of 3D electronic parts. The company was recently invited to submit a bid on a special order for 20,000 units of one of its most popular products.

The plant is currently operating at only 50% capacity, having recently shifted to a bigger factory space. There will be no marketing costs on the special order. The sales manager proposed to set the bid at $9 because she is sure that FoxxCon will win the bid at that price. The suggestion was met with strong objection from the rest of the executive committee members, reason being that the company would make a loss on the special order at that price.

The costs information at the current production volume, and at the increased production volume (on the assumption of winning the bid) is as follows:

CoursHeroTranscribedText: Production volume 40,000 60,000 Manufacturing costs: Direct materials $80,000 $120,000 Direct labour 120,000 180,000 Manufacturing overhead 240,000 300.000 Total manufacturing costs $440,000 $600.000