Loft 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:
Loft Lake Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $15 per unit.
Required:
a. For Loft Lake Cabinets, what is the minimum acceptable price of this one-time-only special order?
b. Other than price, what other items should Loft Lake Cabinets consider before accepting this one-time-only special order?
c. How would the analysis differ if there was limited capacity?
Definitions:
Convergent Thinking
A cognitive process that involves focusing on finding a single, correct solution to a problem by applying logic and analytical skills.
Vision and Mission
A statement of an organization's overarching aspirations and its purpose, serving as a guide for its strategic planning.
Creative Idea
An innovative or original thought that has the potential to lead to something new, whether in art, science, business, or any other field.
Large Number
A mathematical concept referring to numbers that are significantly larger than those typically used in everyday life or basic arithmetic.
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