0723-01 - Relevant costing Special order decisions Spartan Bike example(p 94 The firm is considering whether to enter into a contract to produce

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Special order decisions Spartan Bike example (p. 94) The firm is considering whether to enter into a contract to produce 1,000 bicycles for a customer for a reduced selling price, and must consider the estimated profitability from this special order and the potential effects of this order on the firm's overall profitability. Decision model and variable P i R i C i . SP i X i . VC i X i FC i Parameter estimates and variable constraints P so . SP so X so . VC so X so FC so P so . 110 1000 ( ) . ( ) 80 10 5 3 1000 0 P so 38000 Other potential effects of special order P e1 . SP e1 X e1 . VC e1 X e1 FC e1 P e1 ( ) . 150 ( ) 7000 7500 R ( ) . 85 ( ) 7000 7500 0 C P e1 ( ) 75000 R ( ) 42500 C P e1 32500 P e2 . SP e2 X e2 . VC e2 X e2 FC e2 P e2 ( ) . ( ) 144 150 ( ) 7500 R ( ) . 0 (
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This note was uploaded on 01/13/2012 for the course ACC 202 taught by Professor Sue during the Fall '10 term at Michigan State University.

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0723-01 - Relevant costing Special order decisions Spartan Bike example(p 94 The firm is considering whether to enter into a contract to produce

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