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Thrudo Corporation has a maximum capacity to produce 9000 units of fax machines per month. The unit cost is as follows: Direct material cost: $50
Thrudo Corporation has a maximum capacity to produce 9000 units of fax machines per month. The unit cost is as follows: Direct material cost: $50 Direct Labour cost: $75 Fixed Manufacturing overhead: $25 Variable manufacturing overhead: $14.50 Currently it produces and sells 5 000 units to its regular customers for $200. Flexi Limited has approached Thrudo Corporation with a business proposal to supply them with 4000 fax machines at a special price of $160 per unit. uired: 1. Should the business proposal be accepted? Show all calculations. (2 marks) 2. If the business proposal is for 7 000 units, should it be accepted? Show all calculations. (2 marks) 3. What other strategic issues should be considered in making the decisions whether to accept or reject a special order (2 marks)
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