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Managerial accounting RABCO Supply makes game jerseys for Dubai teams. Al Nahda Club has offered to buy 100 jerseys for $15.00 per jersey. The price
Managerial accounting RABCO Supply makes game jerseys for Dubai teams. Al Nahda Club has offered to buy 100 jerseys for $15.00 per jersey. The price per jersey normally is $18.00, an 80% markup over RABCO purchase price of $10.00 per jersey. RABCO adds a name and number to each jersey at a variable cost of $2.00 per jersey. The annual fixed cost is $6,000 and other fixed costs allocated to jerseys are $2,000. RABCO makes about 2,000 jerseys per year, so the fixed cost is $4,00 per jersey. The machines are idle 75% of the useable time. The Manager turned down the offer of Al Nahda Club, saying it costs us $16 and it is irrational to accept 15. Required: 1. Compute the incremental NOI if the Co. would like to utilize 60% of unused capacity under Al Nahda offer. 2. Find the opportunity cost if the manager declined the offer. 3. What would be your advice if Al Wasal Club offers to buy 9,000 items at 90% of the normal price. Other things remain the same
Managerial accounting
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