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Requirements 1. Suppose Diamond is currently producing and selling 40,000 bats. At this level of production and sales, its fixed costs are the same as
Requirements 1. Suppose Diamond is currently producing and selling 40,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Rice Corporation wants to place a one-time special order for 4,000 bats at $26 each. Diamond will incur no variable selling costs for this special order. Should Diamond accept this one-time special order? Show your calculations. 2. Now suppose Diamond is currently producing and selling 44,000 bats. If Diamond accepts Rice's offer it will have to sell 4,000 fewer bats to its regular customers. (a) On financial considerations alone, should Diamond accept this one-time special order? Show your calculations. (b) On financial considerations alone, at what price would Diamond be indifferent between accepting the special order and continuing to sell to its regular customers at $36 per bat? (c) What other factors should Diamond consider in deciding whether to accept the one-time special order? Data table
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