Problem 8-54

Special-order Decision Rianne Company produces a light fixture with the following unit cost: The production capacity is 300,000 units per year. Because of a depressed housing market, the company expects to produce only 180,000 fixtures for the coming year. The company also has fixed selling costs totaling exist500,000 per year and variable selling costs of exist1 per unit sold. The fixtures normally sell for exist12cach. At the beginning of the year, a customer from a geographic region outside the area normally served by the company offered to buy 100,000 fixtures for exist7 each. The customer also offered to pay all transportation costs. Since there would be no sales commissions involved, this order would not have any variable selling costs. Required: 1. CONCEPTUALCONNECTION Based on a quantitative (numerical analysis, should the company accept the order? 2. CONCEPTUAL CONNECTION What qualitative factors might impact the decision Assume that no other orders are expected beyond the regular business and the special order