Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets in order to keep the plant busy at a time when production is expected to be slower than normal. Home Select has agreed, but only if the price is reduced to $42. Listed below are some data prepared by Marchant. The special order can be produced within available capacity, and will be made in a single batch. There are no variable marketing costs associated with the special order, but Ruby Marchant, the president of the firm, has spent $1,500 during the past month trying to get Home Select to purchase this special order.
Required: Determine the effect of the special order, if taken, on Marchant's total profit.

Question

Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets in order to keep the plant busy at a time when production is expected to be slower than normal. Home Select has agreed, but only if the price is reduced to $42. Listed below are some data prepared by Marchant. The special order can be produced within available capacity, and will be made in a single batch.  There are no variable marketing costs associated with the special order, but Ruby Marchant, the president of the firm, has spent $1,500 during the past month trying to get Home Select to purchase this special order.
Required: Determine the effect of the special order, if taken, on Marchant's total profit.

Quizplus · Accepted Answer

The Answer of Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets in order to keep the plant busy at a time when production is expected to be slower than normal. Home Select has agreed, but only if the price is reduced to $42. Listed below are some data prepared by Marchant. The special order can be produced within available capacity, and will be made in a single batch.  There are no variable marketing costs associated with the special order, but Ruby Marchant, the president of the firm, has spent $1,500 during the past month trying to get Home Select to purchase this special order.
Required: Determine the effect of the special order, if taken, on Marchant's total profit.

Marchant Industries, Which Produces Heating Blankets, Has Been Trying to Get