What should management do

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Reference no: EM131166679

Sunbelt Company produces 100,000 automatic blenders per month, which is 80 percent of plant capacity.

Variable manufacturing costs are $8 per unit.

Fixed manufacturing costs are $400,000, or $4 per unit.

The blenders are normally sold directly to retailers at $20 each.

Sunbelt has an offer from Mexico Co. (a foreign wholesaler) to purchase an additional 2,000 blenders at $11 per unit.

Acceptance of the offer would not affect normal sales of the product, and the additional units can be manufactured without increasing plant capacity. What should management do?

Reference no: EM131166679

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