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Why the company accept the special order

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Category

Cost per Unit

Variable manufacturing costs

$29

Fixed manufacturing costs

$10

Variable selling costs

$8

Fixed selling costs

$12

Capacity cannot be added in the short run and the firm currently sells the product for $65 per unit.

The company is currently producing 180,000 units per month. A potential customer has contacted the firm and offered to purchase 20,000 units this month only. The customer is willing to pay $53 per unit. Since the potential customer approached the firm, there will be no variable selling costs incurred. Should the company accept the special order? Why or why not?

Reference no: EM131754694

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