State three other factors that may influence the decision

Assignment Help Managerial Accounting

Reference no: EM133349467

Question: Solera Company manufactures a standard product SV1 which is a smart vacuum cleaner. SV1 currently fully utilises the available production capacity of 6,000 machine hours per period.
Solera Company has been approached by a potential customer with a view to the placement of an order for 3,000 units of the product at a price of $30 per unit. The product would need to be modified to the customer's own specification. Modifications will include changes in power voltage, packaging and design which will result in additional operating costs being incurred.
Details of operating costs, both for the standard product and for the modified version, are as follows: (see the picture)

Other information:
(1) Fixed production overheads are currently $67,500 per period
(2) The selling price of the standard product is $23 per unit
(3) Further to the costs set out above, investment of $4,500 would be required in specialised equipment in order to be able to manufacture the modified product

REQUIRED
a) Advise the Solera Company whether accepting the new order would be worthwhile. Support your advice with appropriate calculations and explanations based on the above figures.
b) State three other factors that may influence the decision.

Reference no: EM133349467

Questions Cloud

Calculate the present value of the total cost of risk : Calculate the Present Value of the Total Cost of Risk for the next two years in the following scenario. Fast Delivery is a regional transport service.

What are the processes you will follow : Describe with a project example, either one you've participated in or researched. What are the processes you will follow for the Scope Management

What was done by sox and reference the sox act section : What do you think they meant by this? Was this problem resolved by Sarbanes-Oxley (SOX)? Cite and describe what was done by SOX and reference the SOX Act

Define a robust project plan : Chinese and Latin-American markets. As a result, the management team has approved a set of strategic projects to enable that purpose

State three other factors that may influence the decision : Advise the Solera Company whether accepting the new order would be worthwhile. Support your advice with appropriate calculations and explanations

Identify who will carry out the project evaluation : How progress will be evaluated throughout and at the end of the wedding project proposal - Formulate clear indicators for each objective and result

What seems to be motivating certain leaders : What seems to be motivating certain leaders to go "above and beyond", such as Nitin Motwani, Daniel Kleinman and Richard Lamondin? How are they making impact

Type of inferential statistics shows magnitude-direction : Which are predictor variables and what is the criterion variable? What type of inferential statistics shows magnitude and direction?

What is the main motivation for lgbtq2s people to become : what is the main motivation for LGBTQ2S people to become volunteers? Explain and provide two examples (from that community or from a related community

User Account

All Pages