Sales for the Springfield Division of a large company have been off for several years making the
Question:
Sales for the Springfield Division of a large company have been off for several years making the plant far under its capacity of 150,000 units of its only product, D42. This year the company plans to produce and sell 150,000 units of D42 at a $45.00 per unit sales price. The per unit cost to produce and sell the D42 is comprised of $15.00 in fixed costs per unit and $20.00 in variable costs per unit. The company received a special order from a foreign customer for 2,500 of the D42s at a price of $32.00. This order can be completed without increasing the fixed costs of the operation but special packaging will be required that will increase the unit cost by $2.00. In addition, the shipping costs will increase by $4.00 per unit.
What is the financial impact of accepting the special order? In addition, the financial impact would be an increase or decrease in operating income?
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr