Jeff's Widget Corporation Produces and Sells a Part Used in the Production

question 34

Essay

Jeff's Widget Corporation produces and sells a part used in the production of bicycles.The unit costs associated with this part are as follows:
Saturn Company has approached Jeff's Widget Corporation with an offer to purchase 20,000 units of this part at a price of $.80.Accepting this special sales order will put idle manufacturing capacity to use and will not affect regular sales.Total fixed costs will not change.
Determine whether or not the special order should be accepted.Justify your conclusion.

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Definitions:

Private Benefit

The direct advantage or gain obtained by an individual or firm from their economic activities, without considering the impacts on third parties.

Mosquito Control

A management strategy to regulate or eliminate mosquito populations to reduce their damage to human health, economies, and enjoyment.

Marginal Benefit

The additional benefit gained from consuming or producing one extra unit of a good or service.

Optimal Number

The most favorable quantity that achieves the best outcome under specific conditions.