Question
Lark Ark Company sells unfinished platinum decorations at a price of $15.00. The current profit margin is $5.00 per decoration. The company is considering taking
Lark Ark Company sells unfinished platinum decorations at a price of $15.00. The current profit margin is $5.00 per decoration. The company is considering taking individual orders and customizing them for sale. To finish the decoration the company would have to pay additional labor of $3.00, additional materials costing an average of $4.00 per unit and fixed costs would increase by $1,500. If the company estimates that it can sell 600 units for $25.00 each month, should they start processing the unfinished decorations further and begin taking orders? Provide appropriate incremental analysis to support your recommendation.
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