3. Special order: 10 marks Soundwave Printing Company (SPC) is a stationary wholesaler. One of the...

 

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3. Special order: 10 marks Soundwave Printing Company (SPC) is a stationary wholesaler. One of the company's product lines is hardback notebook that are sold to stationary retailers and supermarkets at a price of $8.00 per unit. Based on the annual production of 15,000 units, Soundwave Printing's costs for producing a hardback notebook are as follows: Paper Hardcover Other direct material (i.e., staples and glues) Direct labour Variable overhead Fixed overhead Total cost per notebook $1.00 $1.20 $0.50 $0.80 $1.00 $0.95 $5.45 Cybetron University (CU) is the host of an international academic conference in 2020. CU approach SPC and order a paperback notebook as a conference gift. They will require 2,000 notebooks and are willing to pay $4.20 each notebook. It is worth noting that, paper cover replaces hardcover of the notebook and cost can be reduced by 60% of each unit. Meanwhile, SPC also can save 20% of direct labour and variable overhead costs for making the paperback notebook. One extra cost of the paperback notebook is a spiral cost $0.5 each. Required: a) Based on Cybetron University's offer of $4.20 per unit, should Soundwave Printing Company accept this order or not? Show your calculations. (4 marks) b) If this is a regular order, should manager be prepared to accept these orders at $4.20 as a selling price? List three concerns that the manager of SPC might have and discuss. (6 marks - maximum 10 lines) 3. Special order: 10 marks Soundwave Printing Company (SPC) is a stationary wholesaler. One of the company's product lines is hardback notebook that are sold to stationary retailers and supermarkets at a price of $8.00 per unit. Based on the annual production of 15,000 units, Soundwave Printing's costs for producing a hardback notebook are as follows: Paper Hardcover Other direct material (i.e., staples and glues) Direct labour Variable overhead Fixed overhead Total cost per notebook $1.00 $1.20 $0.50 $0.80 $1.00 $0.95 $5.45 Cybetron University (CU) is the host of an international academic conference in 2020. CU approach SPC and order a paperback notebook as a conference gift. They will require 2,000 notebooks and are willing to pay $4.20 each notebook. It is worth noting that, paper cover replaces hardcover of the notebook and cost can be reduced by 60% of each unit. Meanwhile, SPC also can save 20% of direct labour and variable overhead costs for making the paperback notebook. One extra cost of the paperback notebook is a spiral cost $0.5 each. Required: a) Based on Cybetron University's offer of $4.20 per unit, should Soundwave Printing Company accept this order or not? Show your calculations. (4 marks) b) If this is a regular order, should manager be prepared to accept these orders at $4.20 as a selling price? List three concerns that the manager of SPC might have and discuss. (6 marks - maximum 10 lines)

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