Question: Structuring a Special-Order Problem Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model 155
Structuring a Special-Order Problem Harrison Ford Company has been approached by a new customer with an offer to purchase 10,000 units of its model 155 at a price of $3.80 each. The new customer is geographically separated from the company's other customers, and existing sales would not be affected, Harrison normally produces 75 , 000 units of LS per year but only plans to produce and sell 60,000 in the coming year. The normal sales price is $12 per unit. Unit cost information for the normal level of activity is as follows: Fixed overhead will not be affected by whether or not the special onder is accepted. Required: 1. Should the company accept or reject the special order? 2. By how much will operating income increase or decrease if the order is accepted? by 3
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