What qualitative factors should vail inc. consider

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Reference no: EM133346868

Question: Vail Inc. manufacturers towels that are sells sold to hotels and resorts. Currently, the company has capacity to produce 600,000 towels per year; however, actual production is 520,000. Vail Inc. normally sells towel sells for $24 each. At capacity, the company incurs the following manufacturing costs per unit.

Direct materials 7.40

Direct labour 1.80

Variable overhead 3.30

Fixed overhead 2.80

Total cost 15.30

Recently, a potentially new customer has requested to place an order for 50,000 towels that the customer would like to purchase for $14 per towel. As part of the order, this new customer has requested that Vail Inc. emboss each towel with the hotel's logo. Management at Vail Inc. estimates this embossing will cost $0.20 per towel.

(A) If Vail Inc. accepts the special order, how much will income increase or decrease?
(B) What qualitative factors should Vail Inc. consider before accepting the special order?

Reference no: EM133346868

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