Current Attempt in Progress

Novak Corporation was experiencing a good year in terms of sales volume and profitability of its popular electronic tablets. Each one

sold for $$350,$ with per unit product costs shown below.

A sales manager received a call from a potential customer who wanted a last$-$minute order before year$-$end. The customer knew the

market price but offered to pay $$270$ per unit instead, for $60$ tablets. If the customer's employees liked the tablets, it was possible the

customer would return and pay full price for a second order next year. Novak's production facility has the available capacity for this

special order without reducing capacity for its regular orders.

$($a$)$

Your answer is correct.Your answer is correct.

In addition to the product costs shown above, Novak typically incurs a variable selling cost of $$4$ per unit. If the company accepts

the special order, it will not incur this cost. Based on the available information, should Novak take on this special order? How much

better or worse off will it be if it accepts this order?

Novak

accept the order. The company would be

by $

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Solution

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$($b$)$

Your answer is partially correct.

Assume that instead of having available capacity, Novak is currently operating at capacity and is selling everything it produces to

its usual external customers. If Novak takes on this special order, it will not be able to meet market demand. Given this

information, should Novak accept this special order? How much better or worse off will it be if it accepts the order?Your answer is partially correct.

Assume that instead of having available capacity, Novak is currently operating at capacity and is selling everything it produces to

its usual external customers. If Novak takes on this special order, it will not be able to meet market demand. Given this

information, should Novak accept this special order? How much better or worse off will it be if it accepts the order?

Jovak

accept the order. The total contribution margin would be

by $

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