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A company's maximum capacity is 30,000 units per month. Currently the company is only producing and selling 20,000 units. The company has received an offer to sell an additional 10,000 at a discounted price of $3 per unit. The normal selling price is $5 per unit and variable cost is $2 per unit and fixed cost is also $2 per unit.
Question 1: Should the company accept the offer on financial basis?
Select one:
Option a. No, as the offer price is below the normal selling price
Option b. Yes, as the contribution per units is $3, leading to improved profit
Option c. Yes, as the contribution per unit is $1, leading to improved profit
Option d. No, it is below the total cost per unit of $4
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