Question: a . If the department store offered $ 8 0 , 0 0 0 for the 5 , 0 0 0 extra products, should PA

a. If the department store offered $80,000 for the 5,000 extra products, should PA
accept the order when it is working at 70% capacity, i.e.70,000 products?
Show your workings in full.
b. How would your answer change if at all, if PA is currently operating at full
capacity with confirmed sales for all products?
Show your workings in full.
c. At full capacity, what if PA outsourced the printing, and reduced direct labour on
the Special Order by 50%? The franchise fee would then be paid by the printer.
The cost of outsourcing is quoted as $6 per unit. Is this beneficial to the company?
Show your workings in full.

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