Capitol Has Received a Special Order for 2,000 Units of Its

question 89

Essay

Capitol has received a special order for 2,000 units of its product at a special price of $195. The product normally sells for $260 and has the following manufacturing costs: Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable.
a. If Capital accepts the order, what effect will the order have on the company's short-term profit?
b. What minimum price should Capital charge to achieve a $65,000 incremental profit?
c. Now assume Capital is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Capitol accepts the order, what effect will the order have on the company's short-term profit?

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Definitions:

Gregor Mendel

A scientist known as the father of modern genetics for his pioneering work on the inheritance of traits in pea plants, establishing the laws of genetics.

Heredity

The transmission of genetic traits from parents to offspring, the reason for familial resemblance.

Particulate

Made up of separate and discrete units or particles, often used in the context of matter or inheritance.

Blended

In genetics, this term traditionally referred to an outdated theory that offspring's traits are a smooth, average mix of parents' traits, replaced by the understanding of Mendelian inheritance.