Question
Stretch Yoga pants sell for $89 a pair. Stretch Inc.'s costs for manufacturing a pair of yoga pants are presented below. Stretch Inc. receives an
Stretch Yoga pants sell for $89 a pair. Stretch Inc.'s costs for manufacturing a pair of yoga pants are presented below. Stretch Inc. receives an offer from Yoga-Iz-Us for a one-time order of 12,000 pair of yoga pants at $67 a pair. Stretch Inc. has enough normal capacity to accomodate the order. Yoga-Iz-Us is outside Stretch's normal market. No additional variable selling expense is expected.
Direct Materials:$26
Direct Labor:12
Variable Manufacturing Overhead: 7
Variable Selling Expense: 2
Fixed Manufacturing Overhead: 25
Total Cost:$72
(a) Based on financial information only, would you accept this offer? help with a brief analysis to support your answer.
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