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Special Order Decision: Operating at Full Capacity. The following monthly financial data are for RadioCom, Inc., a maker of handheld VHF radios. RadioCom produces and
Special Order Decision: Operating at Full Capacity. The following monthly financial data are for RadioCom, Inc., a maker of handheld VHF radios.
RadioCom produces and sells radios each month to regular customers.
RadioCom received an offer from the Coast Guard Auxiliary to purchase radios next month for $ per unit. RadioCom can only produce up to radios
a month, so the special order would result in reduced sales to regular customers. Variable costs per radio will remain at $ This special order will have no
effect on monthly fixed costs.
Required:
Using the differential analysis format presented in Figure "Special Order Differential Analysis for Tony's TShirts", determine whether RadioCom would be
better off rejecting Alternative or accepting Alternative the offer received from the Coast Guard Auxiliary.
Summarize the result of accepting the special order using the format presented in Figure "Summary of Differential Analysis for Tony's TShirts".
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