Exercise $11-22($Algo$)$ Special Order; Opportunity Cost $[$LO $11-2]$

Grant Industries, a manufacturer of electronic parts, has recently recelved an invitation to bid on a special order for $23,500$ units of one

of its most popular products. Grant currently manufactures $47,000$ units of this product in its Loveland, Ohio, plant. The plant is

operating at $50\%$ capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at

$$11$ because she is sure that Grant will get the business at that price. Others on the executlve committee of the firm object, saying that

Grant would lose money on the special order at that price.

Required:

What is the relevant cost per unit? What do you think the minimum short$-$term bid price per unit should be$?$ What would be the

impact on short$-$term operating income if the order is accepted at the price recommended by the sales manager?

What would the total opportunity cost be if by accepting the special order the company lost sales of $6,500$ units to its regular

customers? Assume the preceding facts plus a normal selling price of $$24$ per unit.

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

What is the relevant cost per unit? What do you think the minimum short$-$term bid price per unit should be$?$ What would be

the impact on short$-$term operating income if the order is accepted at the price recommended by the sales manager?