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:

Cognitive Appraisal Theory

A theory in psychology that describes the process in which an individual evaluates and interprets a situation, influencing their emotional reaction.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, representing a hierarchy of human needs, from basic physiological needs to self-actualization.

Drive-Reduction Theory

A theory suggesting that the motivation of behavior arises from biological needs that drive an individual to act in ways that reduce these drives.

Cognitive Developmental Theory

A theory in psychology that explains how children acquire the ability to think, learn, and reason as they grow.