10.50 Special order with no spare capacity Crystal Lattice produces exercise mats for use in...
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10.50 Special order with no spare capacity Crystal Lattice produces exercise mats for use in fitness centres. Production capacity is 40 000 mats per year. Due to a chain of fitness centres closing, Crystal Lattice now has spare capacity of 4000 mats per year. An international hotel chain, Resteasy, has recently contacted Crystal Lattice to place a one-off order for 6000 mats. The hotel chain has recently remodelled a number of its hotels to incorporate fitness centres for guests. Budgeted costs for 40 000 mats are: * variable manufacturing costs S1 600 000 fixed manufacturing costs S1 800 000. Mats normally sell for $100 each, and Resteasy has offered to pay $90 per mat. Resteasy has also requested that each mat be embossed with its company logo. An embossing machine costing $40 000 would therefore need to be purchased by Crystal Lattice. The machine could not be used for other products
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