Biello CoManufactures and Sells Medals for Winners of Athletic and Other

question 124

Essay

Biello Co.manufactures and sells medals for winners of athletic and other events.Its manufacturing plant has the capacity to produce 15,000 medals each month;current monthly production is 14,250 medals.The company normally charges $115 per medal.Cost data for the current level of production are shown below: The company has just received a special one-time order for 600 medals at $102 each.For this particular order,no variable selling and administrative costs would be incurred.This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why?

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Definitions:

Promissory Estoppel

A legal principle that prevents a promisor from arguing that an underlying promise offered should not be legally upheld if the promisee has relied on that promise to their detriment.

Unilateral Contract

A type of contract in which only one party makes a promise to perform in exchange for an act by the other party.

Promissory Estoppel

A legal principle that prevents a party from retracting a promise when the other party has reasonably relied on that promise to their detriment.

Consideration

Something of value that is promised, given, or received in a contract to make it legally binding.