Question
Wildwood Camps is a youth organization that severs hot choclate at its camping facilities throughout Montana. The organization has offered Heavenly Treat $29 per case
Wildwood Camps is a youth organization that severs hot choclate at its camping facilities throughout Montana. The organization has offered Heavenly Treat $29 per case for a special-order batch of 1,000 cases. Each case would require a shrink-wrap covering because of moisture problems associated with the organization's storage warehouses. The cost to shrink-wrap is estimated at $3 per case. Selling costs associated with the order would be decreased by $1 per case because it would not include any sales commissions.
A. What is the normal incremental cost of producing and selling a case of hot choclate? What is the incremental cost per case associated with this special order?
B-1. What is the impact on monthly operating profit if the special order is accepted in Heavenly Treats is currently producing and selling 10,000 cases per month?
B-2 . What is the opportunity cost of not accepting the offer?
C-1. What is the impact on monthly operating profit if the special order is accepted and Heavenly Treats is currently operating at its full capacity of 12,000 cases per month?
C-2 What is the opportunity cost of accepting the offer?
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