Question
Lily Company receives a special order to produce prints of a famous painting. The variable cost for these prints are $55 dollars each and will
Lily Company receives a special order to produce prints of a famous painting. The variable cost for these prints are $55 dollars each and will require fixed costs of $50,000. These prints will sell 400 units at $250 each. Company's normal prints cost $40 to make and sell for $180 each. The fixed costs related to these prints are $40,000. Assume that both sets of fixed costs are avoidable for the problem.
How much profit or loss will Lily incur if it accepts the order? Work the problem assuming that the factory has enough capacity to accept the order.
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