Outdoor Living Company has just received a special order for 500 hammocks. Outdo

Question

Outdoor Living Company has just received a special order for 500 hammocks. Outdoor Living has sufficient idle capacity to accept the order. Accepting the order will increase Outdoor Living's variable manufacturing costs. Variable selling and administrative costs would be unaffected. What is the minimum price that Outdoor Living should accept for the special order?

Question 15 options:

1) A price equivalent to the hammock's variable manufacturing cost per unit 2) A price equivalent to the hammock's unit contribution margin 3) The same price that Outdoor Living charges its existing customers 4) None of these.

Explanation / Answer

1. A price equivalent to the hammock's variable manufacturing cost per unit

1. A price equivalent to the hammock's variable manufacturing cost per unit

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