Other than price, what other items should Grant’s Kitchens consider before accepting this one-time-only special order?

ACCOUNTING

Multiple Choice

Grant’s Kitchens is approached by Ms. Tammy Wang, 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:



Direct materials $455

Direct labor 300

Variable manufacturing support 45

Fixed manufacturing support 100

Total manufacturing costs 900

Markup (60%) 540

Targeted selling price $1440



Grant’s Kitchens has excess capacity. Ms. Wang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.



Other than price, what other items should Grant’s Kitchens consider before accepting this one-time-only special order?

a. Reaction of shareholders

b. Reaction of existing customers to the lower price offered to Ms. Wang

c. Demand for cherry cabinets

d. Price is the only consideration.


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