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Question # 4 (20 Points). Garcia Furniture Company is a very profitable furniture manufacturer, but it always has enough idle capacity to process special orders
Question # 4 (20 Points). Garcia Furniture Company is a very profitable furniture manufacturer, but it always has enough idle capacity to process special orders or re-work on existing orders. Though it manufactures standard tables and chairs, it has sufficient manufacturing flexibility to accommodate occasional custom orders In January, it receives a custom order from Gustavo Entertainments to deliver 150 handicapped- accessible tables with motors (for height adjustment at $100/unit. Gustavo Entertainments made a $4,000 non-refundable deposit towards the order. Garcia incurred following cost in completing this order Handicapped Accessible Table $20 8 12 16 4 10 Cost Share of Fixed Manufacturing Overhead. Cost unit Just after the production was completed, Gustavo Entertainments cancelled the order, and forfeited (lost) the deposit. Garcia started considering altematives to selling these handicapped accessible tables Answer the following questions A. Odds-n-Ends, a deep discount retailer, offers Garcia Furniture Company $5,000 to buy the entire lot of 150 handicapped accessible tables. There will be a flat commission of S300 for this sale If this is the only alternative available to Garcia Fumiture Company, should they accept this offer? If not, what is the minimum it should be willing to take for this order? B. A sales agent of Garcia approaches New Age Inc., a new customer to buy these handicapped accessible tables. New Age Inc. agrees to pay $6,250, provided the height adjustment feature (with motors) was removed. The sales agent agrees to take a flat commission of S350 for this order. Production manager provided following estimate of the total cost to re-work on the tables to meet this customer's requirements
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