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The following data pertains to North PR Retail Stores. Usual (normal) average selling price per unit: $9.00 Variable cost per unit: $6.00 Total annual non-avoidable

The following data pertains to North PR Retail Stores. Usual (normal) average selling price per unit: $9.00 Variable cost per unit: $6.00 Total annual non-avoidable fixed cost: $100,000.00 Normal annual sales: 50,000 units Maximum level of annual sales: 75,000 units. Assume three companies from other region offer North PR Retail Stores to purchase 10,000 units and the price per unit offered is:

a. Company 1: $5.95

b. Company 2: $6.00

c. Company 3: $7.99

d. Company 4: $8.00

  • What should be the decision on the three offers?
  • Identify more non-financial factors that influence the company decision to reject or not the offer for companies 1, 2, 3, and 4.
  • Find the relationship if exists between the three offers and total non-avoidable fixed costs of the company and non-avoidable fixed costs per unit of the company.

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