Quality products produces and sells screnn printed t shirts to local organazatin
ID: 2470025 • Letter: Q
Question
Quality products produces and sells screnn printed t shirts to local organazatins. the normal sale price per shirt is 12$. due to sets up cost, they only accept orders of at least 100 shirts. the set up costs per order is 40 and the variable costs per shirts are 3 $. Fixed overhead costs per month total 2000$. Qulaity products has the capacity to screen print as many as 5000 shirts per month. but it is currently producing around 3000. On May 1, the company was approached by local non profit group who wished to place a single order for 100 shirts. the non profit group has indicated that they can only pay 5 per shirt.
1. Should they accept the special offer? by what amount will quntity product's net income increase or decrease if they accept the special offer?
2. List two qualititve factors that should be considered by considered by quality products before accepting the special orders?
Please shoe me how you soloved . thank you so much
Explanation / Answer
1) Statement showing computations for special order Particulars Amount Sales revenue = 100 *5 500.00 Variable Costs = 100*3 300.00 Setup cost per order 40.00 Net revenue from special order = 500 - 300 -40 160.00 2) External Reputation and Labour relations