Problem - Case Hardware sells tiling grout among other products. Their 201T grout merchandise sales is as follows:
|
Kilograms produced and sold
|
625,000 kg
|
|
Sales revenue
|
$4,960,000
|
|
Variable manufacturing expense
|
2,325,000
|
|
Fixed manufacturing expense
|
1,308,000
|
|
Variable selling and administrative expense
|
356,000
|
|
Fixed selling and administrative expense
|
412,000
|
|
Net operating income
|
$559,000
|
Due to storage limitations, Case Hardware's annual storage and sales capacity is 700,000 kg.
Suppose, in 2018, a customer offered to pay $6.00 per kg for a special order of 70,000 kg, should Case Hardware accept or reject the offer. In reaching your answer, assume the company has already committed to sell 675,000 kg of grout for the year. (Please explain your answer).