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A Local Clothing Manufacturer,Polo Pty Ltd,has Been Approached by Wally

Question 46

Multiple Choice

A local clothing manufacturer,Polo Pty Ltd,has been approached by Wally to supply a special order for 20 000 polo shirts at a price of $6 per polo shirt.The cost of producing a shirt is made up of direct costs of $4 per shirt plus an allocation of fixed costs of $7.00 per shirt.Polo Pty Ltd has no spare capacity to manufacture the order without affecting its normal production.If the sale price for each polo shirt currently produced is $12.00 should Polo Pty Ltd accept the order?


A) there is not enough information to decide whether Polo Pty Ltd should accept the order or not
B) no
C) yes,as long as there are no adverse long-term effects that outweigh the short-term benefits
D) yes

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