Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Low-water Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails
Low-water Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year. The following information relates to current production: D $150 Sale price per unit Variable costs per unit: Manufacturing | Marketing and administrative Total fixed costs: Manufacturing Marketing and administrative LITT LLLLLL TTTTTT 11 $55 $25 $640,000 $280,000 a. Should you accept a special sales order for 5,000 sails at a price of $100 per unit? Fixed costs will be increased by $10,000? Give numerical justification for your answer. b. Would your answer be different if you were currently producing and selling 23,000 sails? 3. A company inadvertently produced 3,000 defective products. The product cost $15 each to be manufactured and normally sells for $35 each. A salvage company will purchase the defective units as they are for $12 each. The production manager reports that the defects can be corrected for $5 per unit, enabling the company to sell them at a discounted price of $22.00. The repair operations would not affect other production operations. Prepare an analysis that shows which action should be taken
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started