Lispell Co

question 27

Essay

Lispell Co. manufactures in-line skates that sell for $128 a pair. The company is currently operating at capacity, 2,000 pairs. A special order from a foreign distributor for 400 pairs of skates at $120 a pair has just been received. In order to accept this order, Lispell Co. would have to give up 400 pairs of its regular sales. However, there would be no sales commission incurred on the order. Shown below are the current costs of operation:

a. What costs are relevant to this decision?
b. Provide an incremental analysis to be used in determining whether or not the order should be accepted.
c. Are there any qualitative considerations that need to be addressed? Explain.

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Definitions:

State

An organized community living under a unified political system, the government; may refer to the whole country or a specific territory within it.

Nation

A people who share a collective identity based on a common culture, language, territorial base, and history.

Kapauku

An ethnic group residing in the highlands of Papua, Indonesia, known for their unique social organization and practices.

Rebellion

An act of violent or open resistance against an established government or ruler, often motivated by political grievances, oppression, or desires for independence.