Explain what action should the company president take

Reference no: EM1317229

Pricing Decisions.

The Home Office Company makes all types of office desks. The Computer Desk Division is currently producing 10,000 desks per year with a capacity of 15,000. The variable costs assigned to each desk are $300 and annual fixed costs of the division are $900,000. The computer desk sells for $400. The Executive Division wants to buy 5,000 desks at $280 for its custom office design business. The Computer Desk manager refused the order because the price is below variable cost. The executive manager argues that the order should be accepted because it will lower the fixed cost per desk from $90 to $60 and will take the division to its capacity, thereby causing operations to be at their most efficient level.

Question 1-

Should the order from the Executive Division be accepted by the Computer Desk Division? Why?

Question 2-

From the perspective of the Computer Desk Division and the company, should the order be accepted if the Executive Division plans on selling the desks in the outside market for $420 after incurring additional costs of $100 per desk?

Question 3-

Explain What action should the company president take?

Reference no: EM1317229

Questions Cloud

Investment project and estimation of economic : Determine which of the two investment projects of Problem 1 the manager should choose if the discount rate of the firm is 20 percent.

Regarding delivery of the packet wirelessly : Supposing no malfunction in any of stations or nodes of the network, also explain in scholarly detail if it is possible for the packet to be delivered to the wrong destination

Computing population mean and population standard deviation : Suppose these data represent whole population. Determine the population mean and population standard deviation.

Organization to consolidate servers : Utilizing any organizational model from your experience and or research, describe the pros and cons of this organization in order to consolidate the servers and to relocate the primary data centers.

Explain what action should the company president take : Explain What action should the company president take and should the order be accepted if the Executive Division plans on selling the desks in the outside market for $420

Relationship between diamond and gdp : Examine the variable "diamond." What does this measure? How do you think this variable will relate to GDP per capita and GDP growth?

Estimate z-score and raw score using normal distribution : Compute the score based on their appropriate class means and standard deviations:

Determining the probability using poisson distribution : Number of rescue calls received by rescue squad in city follows a Poisson distribution with mu = 2.83 per day. Squad can handle at most four calls a day. Determine the probability that squad will be able to handle all calls on a particular day?

Explaining the 4g lte : In January 2012, Verizon stated that the 4G LTE is available in the 190 cities covering around 200 million American subscribers. In accordance with the AT&T’s Website.

User Account

All Pages