Parry Enterprises sells copy paper by the case to office supply stores. Each case of paper costs Parry $12. The operating costs are $25,000 per period. Each period, Parry sells approximately 10,000 cases of copy paper at $30 per case. Texas Office Emporium is requesting an order of 3,000 cases of copy paper in the next period at a price of $20 per case. Since Parry has no excess capacity, accepting this order means that only 7,000 cases of copy paper can be sold through normal channels.

1. How much profit (net income) will Parry Enterprises lose or gain if they this offer?

2. Assume Parry Enterprises has excess capacity of 2,000 cases. How much profit (net income would they lose or gain if they accepted the offer?

Answer rating: 100% (QA)

If Parry Enterprises accepts Texas Office Emporiums order for 3000 cases of copy paper at 20 per ... View the full answer