Should seasonic ltd accept foxconn special order

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Reference no: EM132960184

QUESTION - Seasonic Ltd has received a special order from Foxconn requesting 400 of their portable Hard Drives at a price of $60. The Hard Drives will require special engraving of Foxconn's corporate logo. Foxconn needs the Hard Drives because its normal vendor has shut down production due to a fire, Seasonic Ltd's normal selling price for the Hard Drives is $80. The company's fixed manufacturing overhead is $200,000 that will be incurred regardless of whether the order is taken or not. Managers estimate the variable cost of the Hard Drives is $30 per unit. The company would also require purchasing a special machine for $7,500 to engrave Foxconn's logo. The machine would have no other use once the special order is completed.

Required -

a. Seasonic Ltd has no excess manufacturing capacity to fill this special order. The company would need to forgo the sale of 400 units to its regular customers. Should Seasonic Ltd accept Foxconn's special order? Show all workings. Justify your conclusion.

b. Identify and briefly explain two qualitative factors that managers should consider when deciding whether to accept a special order.

Reference no: EM132960184

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