Question
Jennifer Inc. produces and sells component parts to manufactures who produce appliances. They have capacity to produce 120,000 units and currently they produce and
Jennifer Inc. produces and sells component parts to manufactures who produce appliances. They have capacity to produce 120,000 units and currently they produce and sell 105,000 units for $35.00 each. A new customer has asked Jennifer Inc. to sell them 12,000 units for $18.75 each. The customer is located in a separate geographical area which Jennifer Inc. does not sell to and therefore Jennifer Inc.'s sales are not expected to change. Unit information for Jennifer's normal level of production is as follows: Direct materials $7.20 Direct labour $5.80 Variable overhead $4.10 Fixed overhead $7.90 Total $25.00
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