The Shoop Corporation Produces and Sells a Part Used in the Production

question 156

Essay

The Shoop Corporation produces and sells a part used in the production of tractors.The unit costs associated with this part are as follows:
$\begin{array} { l r } \text { Direct materials } & \$ .16 \\\text { Direct labor } & .32 \\\text { Variable manufacturing overhead } & .25 \\\text { Fixed manufacturing overhead } & .10 \\ \text { Total cost } & \underline { \underline { \$ .83 } }\end{array}$

Jupiter Company has approached Shoop Corporation with an offer to purchase 20,000 units of this part at a price of $.72.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:

Competitive Variation

Differences among competitors in a market that provide alternative options to consumers, including features, pricing, and quality.

Variable-Ratio

A type of reinforcement schedule in which a response is reinforced after an unpredictable number of responses, making it highly effective for maintaining behavior.

Fixed-Ratio

A schedule of reinforcement where a response is reinforced only after a specified number of responses have occurred.

Variable-Interval

In the context of operant conditioning, a schedule of reinforcement where a response is rewarded after an unpredictable amount of time has passed.