Products sells a special kind of navigation equipment

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Reference no: EM13788915

Paragon Products sells a special kind of navigation equipment for $1,200. Variable costs are $900 per unit. When a special order arrived from a foreign contractor to buy 40 units at a reduced price of $1,000 per unit, there was a discussion among management. The controller said that as long as the special price was greater than the variable costs, the sale would contribute to the company's profits, and so it should be accepted as offered. The vice-president, however, decided to decline the order. Which of the following statements, if true, will support the decision of the vice-president?

The order is not likely to affect the regular sales.

The company is operating at 70% of its production capacity.

The variable costs of $900 include variable costs of packing the product.

The company will need to hire additional staff to execute this order.

Reference no: EM13788915

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