Jerseys, Inc., currently produces 10,000 jerseys a year for its regular customers and charges $10 per jersey.
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Question:
Jerseys, Inc., currently produces 10,000 jerseys a year for its regular customers and charges $10 per jersey. Jerseys, Inc., has capacity to produce an additional 5,000 jerseys if sales grow in the future. Variable costs total $6 per jersey and annual fixed costs total $15,000. The city of Rockville recently approached the company and proposed a one-time purchase of 3,000 jerseys for $8 each. Should Jerseys, Inc., accept the proposal? Follow the analysis in Figure 6.13 to explain your decision.
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