Poppy has received a special order for 1,000 units of its product at a special price of $125. The product currently sells 18,000 units for $150 and has the following manufacturing costs: Assume that Poppy has sufficient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable.
a. If Poppy accepts the order, what effect will the order have on the company's short-term profit?
For the next two questions, now assume that Poppy has sufficient capacity to fill 500 units of the order without harming normal sales.
b. If Poppy accepts the order and fills it completely, what effect will the order have on the company's short-term profit?
c. If Poppy accepts the special order, what average price should Poppy charge to make a $10,000 incremental profit?

Question

Poppy has received a special order for 1,000 units of its product at a special price of $125. The product currently sells 18,000 units for $150 and has the following manufacturing costs:  Assume that Poppy has sufficient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable.
a. If Poppy accepts the order, what effect will the order have on the company's short-term profit?
For the next two questions, now assume that Poppy has sufficient capacity to fill 500 units of the order without harming normal sales.
b. If Poppy accepts the order and fills it completely, what effect will the order have on the company's short-term profit?
c. If Poppy accepts the special order, what average price should Poppy charge to make a $10,000 incremental profit?

Quizplus · Accepted Answer

The Answer of Poppy has received a special order for 1,000 units of its product at a special price of $125. The product currently sells 18,000 units for $150 and has the following manufacturing costs:  Assume that Poppy has sufficient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable.
a. If Poppy accepts the order, what effect will the order have on the company's short-term profit?
For the next two questions, now assume that Poppy has sufficient capacity to fill 500 units of the order without harming normal sales.
b. If Poppy accepts the order and fills it completely, what effect will the order have on the company's short-term profit?
c. If Poppy accepts the special order, what average price should Poppy charge to make a $10,000 incremental profit?

Poppy Has Received a Special Order for 1,000 Units of Its