Question
Shrub Buds makes lovely designer pots that include plants. They have the following information available: Selling Price $37 Direct Materials 14 Variable Direct Labor 4
Shrub Buds makes lovely designer pots that include plants. They have the following information available:
Selling Price | $37 |
Direct Materials | 14 |
Variable Direct Labor | 4 |
Variable Manufacturing Overhead | 2 |
Fixed Manufacturing Overhead | 5 |
Variable Selling Expenses | 2 |
Fixed Selling Expenses | 3 |
|
|
Total Costs | $30 |
A new customer has approached Shrub Buds and wants to purchase 10,000 units but only wants to pay $21.00 per unit. Shrub Buds will not incur any variable selling expenses on this order.
Calculate the total profit or loss on this special order. Assuming this order is profitable, why might Shrub Buds still decline the offer? Assuming this offer is not profitable, why might Shrub buds accept the offer?
Total Profit or Loss on Special Order _________________________________
Why decline if profitable?
Why accept if not profitable?
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