Sherene Nili manages a company that produces wedding gowns. She produces both a custom product that...

Sherene Nilli Statement of profitability: Custom Standard Dresses Dresses 10 20 47,000 27,000 Total 30 74,000 Total number of dressses Sales Revenue Less Total costs: Materials Labor Machine Depreciation Rent Heat and Light Total variable costs Other production costs Marketing and Admnistration total fixed costs Total costs Operating profits 9,400 19,400 540 3,600 1,100 34,040 7,400 8,400 240 2,200 700 18,940 16,800 27,800 780 5,800 1,800 52,980 2,200 7,100 9,300 62,280 11,720 Statement of profitability if the special order is accepted: Secial order Total Custom Standard Dresses Dresses 10 10 47,000 13,500 30 83,100 22,600 3,700 4,200 120 1,100 Total number of dressses Sales Revenue Less Total costs: Materials Labor Machine Depreciation Rent Heat and Light Total variable costs Contribution Other production costs Marketing and Admnistration Total fixed cost Total costs Operating profits 9,400 19,400 540 3,600 1,100 34,040 12,960 18,500 33,000 770 5,400 9,400 110 1,100 350 350 9,470 4,030 16,360 6,240 5,800 1,800 59,870 23,230 2,200 7,100 9,300 69,170 13,930 38,960 A) Should Ms. Nili take the order? Explain you answer. Ms. Nili should accept the special order as the operating profits increase by $2,210 (i.e. 13,930 - 11,720).

B) What is the minimum prices. Nili should accept to take the special order? The minimum acceptable price for the special order is the total variable cost which is $16,390. C) What are the other factore, if any, besides price that she should consider? If the special order is accepted, the existing order will be permanently lost. The opportunity cost of losing the customers for standard dresses should be considered.