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Tasty Pizza company manufactures flour milling machinery according to customer specifications. The company operated at 75 per cent of practical capacity during the year just
Tasty Pizza company manufactures flour milling machinery according to customer specifications. The company operated at 75 per cent of practical capacity during the year just ended, with the following results in thousands. Tasty pizza company, which expects continued operation at 75 per cent of capacity, recently submitted a bid of $82, 500 on custom-designed machinery for holistic pizza ltd. Tasty pizza Company used a pricing formula in deriving the bid amount, the formula being based on last year's operation results, The formula follows: Required Calculate the impact the order on Tasty pizza company's profit if the $82, 500 bid were accepted by holistic pizza ltd. Assume that Holistic pizza has rejected tasty company's bid but has stated it is willing to pay $63, 500 for the machinery Should tasty pizza company manufacture for the counter offer of $63, 500? Explain your answer and show calculations
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