Essay
Loft Lake Cabinets is approached by Ms.Jenny Zhang,a new customer,to fulfill a large one-time-only special order for a product similar to one offered to regular customers.The following per unit data apply for sales to regular customers:
Loft Lake Cabinets has excess capacity.Ms.Zhang wants the cabinets in cherry rather than oak,so direct material costs will increase by $15 per unit.
Required:
a.For Loft Lake Cabinets,what is the minimum acceptable price of this one-time-only special order?
b.Other than price,what other items should Loft Lake Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?
Correct Answer:
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a.$157.70 = Variable costs ($50 + $62.50...View Answer
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