Greenview Corp. makes several varieties of wooden furniture. It has been approached about producing a special order for Wilderness rocking chairs. A local senior citizens group would use the special-order chairs in a newly remodeled activity center.
The senior citizens group has offered to buy 80 of the Wilderness chairs at a price of $65 each. Greenview currently has the excess capacity necessary to accept the offer. A summary of the information related to production of Greenview's Wilderness model follows:
Required:
Compute the incremental profit (or loss) from accepting the special order.
Should Greenview accept the special order?
Suppose that the special order had been to purchase 100 rocking chairs for $60 each. Recompute the incremental profit (or loss) from accepting the special order.
Assume Greenview is operating at full capacity. Calculate the special-order price per unit at which Greenview would be indifferent between accepting or rejecting the special order.