Commercial Carpets manufactures custom mats. The details on its standard run of a $1$ m x $2$ m mat is as follows:

Quantity

Unit Selling Price

Unit Variable Cost

Fixed Costs

$320$

$$56$

$$31$

$$1,900$

A prospective customer has indicated it would purchase $20\%$ more mats than the standard order if the unit price could be reduced by $$2.$

Assuming no changes to the cost structure, should the sales manager accept this order? 

 

Answer rating: 100% (QA)

To determine whether the sales manager should accept the order with the reduced unit price we need t... View the full answer