Silver Lake Cabinets is approached by Ms.Jenny Zhang, a new customer, to fulfill 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:
Silver Lake Cabinets has excess capacity.Ms.Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.Required:
a.For Silver Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.Other than price, what other items should Silver Lake Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?

Question

Silver Lake Cabinets is approached by Ms.Jenny Zhang, a new customer, to fulfill 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:
  Silver Lake Cabinets has excess capacity.Ms.Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.Required:
a.For Silver Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.Other than price, what other items should Silver Lake Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?

Quizplus · Accepted Answer

The Answer of Silver Lake Cabinets is approached by Ms.Jenny Zhang, a new customer, to fulfill 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:
  Silver Lake Cabinets has excess capacity.Ms.Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.Required:
a.For Silver Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.Other than price, what other items should Silver Lake Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?

Silver Lake Cabinets Is Approached by Ms