Asked by Kassy Lazcano on Apr 25, 2024
Geneva Company manufactures dolls that are sold to various customers.The company works at full capacity for half the year to meet peak demand,and operates at 80% capacity for the other half of the year.The following information is provided: 
Geneva receives a purchase order to make 5,000 dolls as a one-time event.The good news is that this order is during a period when Geneva does have sufficient excess capacity.What is the lowest selling price Geneva should accept for this purchase order?
A) $35.00
B) $26.00
C) $29.50
D) $23.50
E) $25.00
Excess Capacity
A situation where a company can produce more goods than the market demands, indicating underused resources or a need for adjustment in production levels.
Selling Price
The amount of money for which a product or service is sold to the consumer, not necessarily reflective of the total price or production costs.
Purchase Order
A formal document sent by a buyer to a seller with the intent to purchase products or services under specified terms.
- Determine the minimum acceptable price for special orders to increase profits.
Learning Objectives
- Determine the minimum acceptable price for special orders to increase profits.
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