Gold River Cabinets is approached by Ms.Mary Wong, 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:
Gold River Cabinets has excess capacity.Ms.Wong wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.Required:
a.For Gold River Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.Other than price, what other items should Gold River Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?

Question

Gold River Cabinets is approached by Ms.Mary Wong, 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:
  Gold River Cabinets has excess capacity.Ms.Wong wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.Required:
a.For Gold River Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.Other than price, what other items should Gold River Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?

Quizplus · Accepted Answer

The Answer of Gold River Cabinets is approached by Ms.Mary Wong, 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:
  Gold River Cabinets has excess capacity.Ms.Wong wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.Required:
a.For Gold River Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.Other than price, what other items should Gold River Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?

Gold River Cabinets Is Approached by Ms