Lady Gaga Plc is a renowned record manufacturing company and has received a one off order from Ginger Blears an English member of parliament to write and manufacture a song for her about how honourable she is. In addition to demonstrate her selfless efforts to public duty the record should be made from platinum, a more expensive material than the usual material used to manufacture records. Ms Blears is happy to pay for this record out of her expenses claiming it back from the taxpayer.
Currently Lady Gaga Plc’s work force is at full capacity and would have to stop work on existing songs in development such as “If you don’t know me by now” and “Everything I do, I do it for you” for other trustworthy members of parliament.
The following information is available for the usual manufacture of new songs.
Per song ($)
Selling price 45,000
Material (5,000)
Variable overheads (3,000)
Labour (2,000)
Contribution 35,000
Fixed overhead (1,500)
Profit 33,500
What is the lost contribution suffered by Lady Gaga Plc if it accepted the order from Ginger Blears?