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Requirement 4 (3 points): After receiving the explanations offered in Requirement 2 and 3, Jodie said, Forget that I had the Target order. I had
Requirement 4 (3 points): After receiving the explanations offered in Requirement 2 and 3, Jodie said, "Forget that I had the Target order. I had an even bigger order from Lands' End. It was for 500,000 units and would have filled the plant completely. I told my sister I'd settle for no commission. There would have been no selling and administrative costs whatsoever because Lands' End would pay for the shipping and would not get any advertising allowances. Lands' End offered $8.70 per unit. Our fixed manufacturing costs would have been spread over 2.5 million instead of 2 million units. Wouldn't it have advantageous to accept the order? Our old fixed manufacturing costs were $2.00 per unit. The added volume would reduce the cost more than our loss on our variable costs per unit. Am I correct? What would have been the impact on total operating income if we had accepted the order?" Prepare a memo for Jodie summarizing your response. This memo must be no more than 1-page long, single spaced, size 12 font. Note that you may be able to answer the question is significantly less space. Answers must include supporting calculations to receive credit
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