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George Jeffers manages a company producing men's suits, offering both made - to - order and standard suits in retail stores. The provided table is
George Jeffers manages a company producing men's suits, offering both madetoorder and standard suits in retail stores. The provided table is a forecasted income statement for March. George has firm orders for the custom suits indicated in the forecast. Depreciation is at $ per machine hour used, making it a variable cost. Total machine hours for March are with dedicated to custom suits. The building space, rented at $ per month, allocates costs based on space usage.
George faces a decision regarding a special request from a wardrobe consultant, who offers $ for a suit needed in early April. Fulfilling the order would require reducing standard suit production, with a loss of future production capacity. Costs for the special order are an additional $ for materials, $ for labor, and machine hours. Accepting the order would save hours of standard suit production.
Considering this, George must ponder:
Should he accept the special order, and what rationale supports the decision? Show calculations
What minimum price should be set for the special order to remain profitable? Show worktableCustom Suits,Standard Suits,TotalNumber of Suits,Sales Revenue,$$$
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