Should chill furniture accept the order

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Point 1: In-Class Problem Chill Furniture manufactures a set of outdoor furniture that it sells for $225. It currently manufactures and sells 6,000 sets per year. The manufacturing costs include $85 for material and $45 for labor per set. The overhead charge is $35 per set, which consists entirely of fixed costs.

Point 2: Chill Furniture is considering a special purchase offer from a large retail firm, which has offed to buy 600 sets per year for 3 years at a price of $150 per set. Chill has the available plant capacity to produce the order and expects no other orders or profitable alternative uses of the plant capacity.

Question 1: Should Chill Furniture accept the order?

Reference no: EM132490589

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