Example: Jet, Inc. makes a single product whose normal selling price is 80 KD per unit. A foreign distributor offers to

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Example Jet Inc Makes A Single Product Whose Normal Selling Price Is 80 Kd Per Unit A Foreign Distributor Offers To 1 (289.57 KiB) Viewed 68 times

1.Should Jet accept the offer? Explain with
calculations?
2.If the foreign distributor asked for 50,000 units, and
ask for a special packaging that would costs 7KD per unit, based on
financial calculations alone, should Jet Inc. accept the
offer?
Example: Jet, Inc. makes a single product whose normal selling price is 80 KD per unit. A foreign distributor offers to purchase 30,000 units at 55 KD per unit. This is a one-time order that would not affect the company's regular business and does not need any selling expenses. Annual capacity is 110,000 units, but Jet, Inc. is currently producing and selling only 70,000 units. The following are the costs of producing the 70,000 units: Direct Material 1,400,000 KD . Direct labor 700,000 KD Variable OH 700,000 KD . Fixed OH 1, 400,000 KD . Variable selling expense 350,000 KD . Fixed operating expenses 500,000 KD