Alpha Cables Ltd manufactures electric cables for households. The company has capacity to produce 16,000 units per month. However, the current plans call for monthly production and sales of 10,000 units at €15 each. Cost per unit are as follows:

Required

1. Should the company accept a special order for 6,000 units at £10.50 per unit?
2. What is the maximum price the company should be willing to pay to an outside supplier who is interested in manufacturing this product?
3. What is short-run pricing?

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Direct materials Direct labor Fixed factory overheads Variable selling expenses Fixed administrative expenses € 6.25 3.75 1.50 0.25 1.25 13.00