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 offer
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 accommodate 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? make a brief analysis to support your answer.
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