Question
Prestige Industries currently manufactures and sells 20,000 power saws per month, although it has the capacity to produce 35,000 units per month. At the 20,000-unit-per-month
Prestige Industries currently manufactures and sells 20,000 power saws per month, although it has the capacity to produce 35,000 units per month. At the 20,000-unit-per-month level of production, the per-unit cost is $45, consisting of $30 in variable costs and $15 in fixed costs. Prestige sells its saws to retail stores for $75 each. Roy Distributors has offered to purchase 5,000 saws per month at a reduced price. Prestige can manufacture these additional units with no change in its present level of fixed manufacturing costs.
6. Refer to the information above. Which of the following is not a relevant factor in Prestige's decision concerning whether to accept the special order from Roy?
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