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

question 11

Multiple Choice

Dot has received a special order for 2,000 units of its product at a special price. The product normally sells for $200 and has the following manufacturing costs: Assume that Dot has sufficient capacity to fill the order without harming normal production and sales. What minimum price should Dot charge to achieve a $50,000 incremental profit?

• A) $225
• B) $155
• C) $168
• D) $180

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Definitions:

Incremental Cash Flow

The extra money a company gains by embarking on a project or investment.

Credit Policies

Guidelines a company follows to determine credit terms for customers, including who is eligible for credit and on what terms.

Switching

The act of changing from one option, system, service, product, or company to another, often seen in customers changing providers or businesses changing suppliers or technologies.

Economic Order Quantity

A formula used by companies to determine the optimal order size that minimizes the total costs associated with inventory.