We sell $50\mathrm{.}000$ units of a special material using $5\%$ of the capacity. There is a new order consisting $30\mathrm{.}000$ units from a foreign market for $600$$$.$ The managers of the business suggested the followings:

a$)$ Marketing manager suggested to accept even a loss because this is a new market,

b$)$ Production manager suggested to reject the offer because of the loss,

c$)$ Finance manager suggested to accept it because the new order is profitable.

Financial Information:

Costs of the $50\mathrm{.}000$ Units production:

Direct Material $7\mathrm{.}500\mathrm{.}000$ $

Direct Labor $7\mathrm{.}500\mathrm{.}000$ $

Fixed Manufacturing Overheads $10\mathrm{.}000\mathrm{.}000$ $

Variable Man. Overheads $10\mathrm{.}000\mathrm{.}000$ $

Question:

Designate financially whose suggestion is good for the business.

Answer rating: 100% (QA)

ANSWER To evaluate the suggestions of the managers lets calculate the cost of producing the addition... View the full answer