Crescent Computer Company manufactures tablets and PCs. For the last six months, the company reported the following operating results while operating at 80% of plant capacity when 3,000 units were produced and sold: Orders for the second half of the year have been slower than usual, so when a new customer contacted the company and requested a special discount, management wanted to thoroughly evaluate this potential new customer and the possibility of the special order-offer.
a.Assume that the new customer is requesting 300 units in this special order and offers $50 per unit. Since the company has contacted the company directly, there are no variable selling costs associated with the special order. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations
b.Assume now, that the new customer is requesting 200 units in this special order and offers $40 per unit. Since the company has contacted the company directly, there are no variable selling costs associated with the special order. Now, though, the new customer would like special imprinting to put the company name on each tablet which will require Crescent Computers to purchase a special imprinting machine which will cost $3,000. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations
c.Assume now that the new customer is requesting 150 units in this special order and offers $45 per unit. Since the company has contacted the company through a sales representative, the variable selling costs associated with the special order will now be incurred. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations

Question

Crescent Computer Company manufactures tablets and PCs. For the last six months, the company reported the following operating results while operating at 80% of plant capacity when 3,000 units were produced and sold:  Orders for the second half of the year have been slower than usual, so when a new customer contacted the company and requested a special discount, management wanted to thoroughly evaluate this potential new customer and the possibility of the special order-offer. 
a.Assume that the new customer is requesting 300 units in this special order and offers $50 per unit. Since the company has contacted the company directly, there are no variable selling costs associated with the special order. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations
b.Assume now, that the new customer is requesting 200 units in this special order and offers $40 per unit. Since the company has contacted the company directly, there are no variable selling costs associated with the special order. Now, though, the new customer would like special imprinting to put the company name on each tablet which will require Crescent Computers to purchase a special imprinting machine which will cost $3,000. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations
c.Assume now that the new customer is requesting 150 units in this special order and offers $45 per unit. Since the company has contacted the company through a sales representative, the variable selling costs associated with the special order will now be incurred. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations

Quizplus · Accepted Answer

The Answer of Crescent Computer Company manufactures tablets and PCs. For the last six months, the company reported the following operating results while operating at 80% of plant capacity when 3,000 units were produced and sold:  Orders for the second half of the year have been slower than usual, so when a new customer contacted the company and requested a special discount, management wanted to thoroughly evaluate this potential new customer and the possibility of the special order-offer. 
a.Assume that the new customer is requesting 300 units in this special order and offers $50 per unit. Since the company has contacted the company directly, there are no variable selling costs associated with the special order. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations
b.Assume now, that the new customer is requesting 200 units in this special order and offers $40 per unit. Since the company has contacted the company directly, there are no variable selling costs associated with the special order. Now, though, the new customer would like special imprinting to put the company name on each tablet which will require Crescent Computers to purchase a special imprinting machine which will cost $3,000. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations
c.Assume now that the new customer is requesting 150 units in this special order and offers $45 per unit. Since the company has contacted the company through a sales representative, the variable selling costs associated with the special order will now be incurred. If Crescent Computers has enough excess capacity to accept this order, how much better or worse off would the company be? Show computations

Crescent Computer Company Manufactures Tablets and PCs