Rippey Ltd

question 9

Essay

Rippey Ltd. manufactures a single product with the following unit costs for 5,000 units:
Recently, a company approached Rippey Ltd. about buying 1,000 units for £225. Currently, the models are sold to dealers for £412.50. Rippey's capacity is sufficient to produce the extra 1,000 units. No additional selling expenses would be incurred on the special order.
Required:

a.
What is the profit earned by Rippey Ltd. on the original 5,000 units?
b.
Should Rippey accept the special order if its goal is to maximize short-run profits? How much will income be affected?
c.
Determine the minimum price Rippey would want to receive in order to increase profits by £7,500 on the special order.
d.
When making a special order decision, what nonquantitative aspects of the decision should Rippey Ltd. consider?

---

Definitions:

Mood Disorders

A category of mental disorders involving persistent disturbances or fluctuations in mood that cause significant impairment in daily functioning.

Schizophrenic Disorders

A group of severe mental disorders characterized by disordered thoughts, perceptions, and emotions, leading to a detachment from reality.

Disturbed Emotion

An emotional state that is agitated or disrupted, often leading to psychological discomfort or behavior that deviates from the individual's normal emotional responses.

Concordance Rates

The probability that both individuals in a pair, often twins, will share a particular trait or disorder.