Kasten, Inc. budgeted 10,000 widgets for production during 2010. Kasten has capacity to produce 12,000 units. Fixed factory overhead is allocated to production. The following estimated costs were provided:
Instructions
Answer each of the following independent questions:
1. Kasten received an order for 1,000 units from a new customer in a country in which Kasten has never done business. This customer has offered $43 per widget. Should Kasten accept the order?
2. Kasten received an offer from another company to manufacture the same quality widgets for $39. Should Kasten let someone else manufacture all 10,000 widgets and focus only on distribution?

Question

Kasten, Inc. budgeted 10,000 widgets for production during 2010. Kasten has capacity to produce 12,000 units. Fixed factory overhead is allocated to production. The following estimated costs were provided:  
Instructions
Answer each of the following independent questions:
1. Kasten received an order for 1,000 units from a new customer in a country in which Kasten has never done business. This customer has offered $43 per widget. Should Kasten accept the order?
2. Kasten received an offer from another company to manufacture the same quality widgets for $39. Should Kasten let someone else manufacture all 10,000 widgets and focus only on distribution?

Quizplus · Accepted Answer

The Answer of Kasten, Inc. budgeted 10,000 widgets for production during 2010. Kasten has capacity to produce 12,000 units. Fixed factory overhead is allocated to production. The following estimated costs were provided:  
Instructions
Answer each of the following independent questions:
1. Kasten received an order for 1,000 units from a new customer in a country in which Kasten has never done business. This customer has offered $43 per widget. Should Kasten accept the order?
2. Kasten received an offer from another company to manufacture the same quality widgets for $39. Should Kasten let someone else manufacture all 10,000 widgets and focus only on distribution?