Suppose a customer offers you a huge contract for your product (from the first assignment listed below "Manufacturing a car). This customer will pay you 10% less than your normal charge, but will order 5,000 units of your product. Using CVP analysis and the costs that you established in Assignment One, should you take the offer or not? (This is a "special order" decision.)

Manufacturing a Car

Materials:

-steel

-plastic

-rubber

Glass

Labor:

-assembly

-painting

-testing

The total cost of making a car is:

Product costs:

Materials: $5,000

Labor: $800

Utilities: $300

Period costs:

Supervisor salary: $1500

Building rent: $1000

Advertising: $100

The total cost of making a car is $8,700