Answer the following questions using the information below:
Grant's Cakes is approached by Ms Tammy Wang,a new customer,to fulfil 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:
$$\begin{array} { l r }
\text { Direct materials } & \$ 455 \
\text { Direct labour } & 300 \
\text { Variable manufacturing support } & 45 \
\text { Fixed manufacturing support } & 100 \
\text { Total manufacturing costs } & 900 \
\text { Mark-up (60\%) } & \underline { 540 } \
\text { Targeted selling price } & \$ 1440
\end{array}$$ Grant's Kitchens has excess capacity.Ms Wang wants layered cream cheese pound cakes rather than plain pound cakes,so direct material costs will increase by $30 per unit.
-Other than price,what other items should Grant's Cakes consider before accepting this one-time-only special order?
A)Price is the only consideration
B)Demand for cherry cabinets
C)Reaction of shareholders
D)Reaction of existing customers to the lower price offered to Ms Wang

Question

Answer the following questions using the information below:
Grant's Cakes is approached by Ms Tammy Wang,a new customer,to fulfil 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:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 455 \
\text { Direct labour } & 300 \
\text { Variable manufacturing support } & 45 \
\text { Fixed manufacturing support } & 100 \
\text { Total manufacturing costs } & 900 \
\text { Mark-up (60\%) } & \underline { 540 } \
\text { Targeted selling price } & \$ 1440
\end{array}$$ Grant's Kitchens has excess capacity.Ms Wang wants layered cream cheese pound cakes rather than plain pound cakes,so direct material costs will increase by $30 per unit.
-Other than price,what other items should Grant's Cakes consider before accepting this one-time-only special order?
A)Price is the only consideration
B)Demand for cherry cabinets
C)Reaction of shareholders
D)Reaction of existing customers to the lower price offered to Ms Wang

Quizplus · Accepted Answer

Grant's Cakes should consider the reaction of existing customers to the lower price offered to Ms Wang. Lowering prices for a one-time special order may cause existing customers to question the value of the product and may lead to a loss of trust and loyalty. Therefore, the impact on customer perception and loyalty should be evaluated before accepting the order.

Answer the Following Questions Using the Information Below: Grant's Cakes

Answer the Following Questions Using the Information Below:
Grant's Cakes