Bueckers Corp. has a current production rate of 5,000,000 units, an average cost of $52...
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Bueckers Corp. has a current production rate of units, an average cost of $ per unit, and a current market price of $ They estimate that they can increase production to units without incurring an increase in fixed costs. Their estimated average cost at a production amount of units is $ per unit. Their marginal cost is constant for this item. Suppose a firm offers to purchase an additional units at $ per unit.
The order came from a customer in a region not part of ordinarily sales channels. No variable selling or administrative expenses would be associated with the order.
If the company accepted the order, what would be the impact on profits? Should Tenor Saw Corp. accept the bid? Why?
Under what conditions would you turn down this order, even if it were profitable?
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