Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Soft Mats produces exercise mats for use in fitness centres. Production capacity is 37,000 mats per year. Due to a chain of fitness centres closing,
Soft Mats produces exercise mats for use in fitness centres. Production capacity is 37,000 mats per year. Due to a chain of fitness centres closing, Soft Mats now has spare capacity of 5,000 mats per year. An international hotel chain, Mini Break, has recently contacted Soft Mats to place a one-off order for 9,000 mats. Mini Break has recently remodelled a number of its hotels to incorporate fitness centres for guests. Budgeted costs for 37,000 mats are: variable manufacturing costs $370,000 fixed manufacturing costs $1,016,000. Mats normally sell for $100 each, and Mini Break has offered to pay $70 per mat. Mini Break has also requested that each mat be embossed with its company logo. An embossing machine costing $14,000 would therefore need to be purchased by Soft Mats. The machine could not be used for other products. If Soft Mats decides to accept the special order, it will need to fulfill in full the special order and turn away existing orders if the production capacity is exceeded. Important: For any amounts, please don't include the dollar sign ($) or any thousands separators - i.e., $12,000 should be written as 12000. For net loss, please include the - (minus) sign in front of the amounts. Please don't place the amounts in parentheses. Required: Net profit/loss obtained if special order is rejected: $ Net profit/loss obtained if special order is accepted: $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started