Home /
Expert Answers /
Accounting /
smooth-move-company-manufactures-professional-paperweights-and-has-been-approached-by-a-new-custome-pa921
(Solved): Smooth Move Company manufactures professional paperweights and has been approached by a new custome ...
Smooth Move Company manufactures professional paperweights and has been approached by a new customer with an offer to purchase 15000 units at a per-unit price of \( \$ 8.00 \). The new customer is geographically separated from Smooth Move's other customers, and existing sales will not be affected. Smooth Move normally produces 82000 units but plans to produce and sell only 65000 in the coming year. The normal sales price is \( \$ 12 \) per unit. Unit cost information is as follows: If Smooth Move accepts the order, no fixed manufacturing activities will be affected because there is sufficient excess capacity. Required: 1. Should Smooth Move accept the special order? By how much will profit increase or decrease if the order is accepted? [ 6 Marks] 2. Briefly explain the significance of the statement in the exercise that 'existing sales will not be affected" by special sales. [4 Marks]