Paragon Products Sells a Special Type of Navigation Equipment for $1,400.Variable

question 110

Multiple Choice

Paragon Products sells a special type of navigation equipment for $1,400.Variable costs are $800 per unit.When a special order arrived from a foreign contractor to buy 44 units at a reduced sales price of $1,000 per unit,there was a discussion among the managers.The controller said that as long as the special price was greater than the variable costs,the sale would contribute to the company's profits and should be accepted as offered.The vice president,however,decided to decline the order.Which of the following statements supports the decision of the vice president?

• A)The order is not likely to affect the regular sales.
• B)The company is operating at 70% of its production capacity.
• C)The variable costs of $800 includes variable costs of packing the product.
• D)The company will need to hire additional staff to execute this order.

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Definitions:

Original Owner

The first or initial owner of an item, property, or intellectual property right.

Ownership

The state or fact of being the legal possessor or holder of an item, property, or asset.

Producing

The action of making, creating, manufacturing, or bringing something into existence.

Purchasing

The process of acquiring goods or services to accomplish the goals of an organization or individual.