Silver Lake Cabinets Is Approached by Ms

question 52

Essay

Silver Lake Cabinets is approached by Ms.Jenny Zhang, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers.The following per unit data apply for sales to regular customers:
Silver Lake Cabinets has excess capacity.Ms.Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.Required:
a.For Silver Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?
b.Other than price, what other items should Silver Lake Cabinets consider before accepting this one-time-only special order?
c.How would the analysis differ if there was limited capacity?

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Definitions:

Zerk Fitting

A grease fitting used to deliver lubricant under pressure into a specific location, commonly found in mechanical systems like automotive suspensions.

Trailer Pintle Hook

A type of tow hitch that uses a pivoting arm and hook mechanism to connect a trailer to a towing vehicle.

Welding

Welding is a fabrication process that joins materials, usually metals or thermoplastics, by using high heat to melt the parts together and allowing them to cool, causing fusion.

Ethylene Glycol (EG)

A chemical compound used as the primary base for antifreeze solutions in vehicle cooling systems, noted for its ability to lower the freezing point of water.