Asked by Deanne Pawhay on Jul 05, 2024
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Piper Rose Boutique has been approached by the community college to make special polo shirts for the faculty and staff. The college is willing to buy 4,000 polos with its own design for $6.00 each. The company normally sells its shirts for $12.00 each. The company has enough excess capacity to make this order. A breakdown of costs is as follows:Should Piper Rose Boutique accept the special order made by the college?
Excess Capacity
Refers to a scenario where a company is operating below its maximum production capacity and can increase output without incurring significant additional costs.
Special Order
A one-time order that is not part of the company's usual ongoing operations, often requiring special pricing or terms.
Polo Shirts
Casual short-sleeved cotton shirts with a collar and several buttons at the neck, often featuring a logo or emblem on the chest.
- Understand the principles of special orders and their impact on pricing and profitability.
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Learning Objectives
- Understand the principles of special orders and their impact on pricing and profitability.
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