Loft Lake Cabinets Is Approached by Ms Loft Lake Cabinets Has Excess Capacity

question 26

Essay

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:
$\begin{array}{lr}\text { Direct materials } & \$ 50.00 \\\text { Direct labor } & 62.50 \\\text { Variable manufacturing support } & 30.00 \\\text { Fixed manufacturing support } & 37.50 \\\quad \text { Total manufacturing costs } & 180.00 \\\text { Markup (60\%) } & 108.00 \\\text { Targeted §elling price } & \$ 288.00\end{array}$ 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?

Grasp the legal requirements for setting up and operating a sole proprietorship.

Understand the concept of unlimited liability for sole proprietors and partners.

Comprehend the legal entity status of societies and their separation from members.

Differentiate between partners' responsibilities to each other and to third parties.

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Definitions:

Automating Process

The method of using technology to perform tasks with minimal human intervention.

Discount Rate

The interest rate fundamental to converting future cash flows into their present financial equivalent in discounted cash flow analysis.

Annual Operating Costs

The total expenses associated with running a business, facility, or equipment for one year, including utilities, salaries, and maintenance.

Additional Revenue

Income generated from activities not related to the primary operation of the business.