Pamela in Bamplona makes bull-repellent scent according to a traditional Spanish recipe, which normally sells at €9 (Euros) per unit. Normal production volume is 10,000 ounces per month. Average cost is €5 per ounce, of which €2 is direct material and €1 is variable conversion cost. This product is seasonal. After July, demand for this product drops to 6,000 ounces monthly. In November, Umberto offers to buy 1.500 ounces for €6,000. Assume that the order is received in July, peak season. If Pamela accepts the order, she will turn away regular customers who order 500 ounces. Pamela should:

Pamela in Bamplona makes bull-repellent scent according to a traditional Spanish recipe, which normally sells at €9 (Euros) per unit. Normal production volume is 10,000 ounces per month. Average cost is €5 per ounce, of which €2 is direct material and €1 is variable conversion cost. This product is seasonal. After July, demand for this product drops to 6,000 ounces monthly. In November, Umberto offers to buy 1.500 ounces for €6,000. Assume that the order is received in July, peak season. If Pamela accepts the order, she will turn away regular customers who order 500 ounces. Pamela should:

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EB: Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the...

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Pamela in Bamplona makes bull-repellent scent according to a traditional Spanish recipe, which normally
sells at €9 (Euros) per unit. Normal production volume is 10,000 ounces per month. Average cost is €5 per
ounce, of which €2 is direct material and €1 is variable conversion cost. This product is seasonal. After July,
demand for this product drops to 6,000 ounces monthly. In November, Umberto offers to buy 1,500
ounces for €6,000.
Assume that the order is received in July, peak season. If Pamela accepts the order, she will turn away
regular customers who order 500 ounces. Pamela should:

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Pamela in Bamplona makes bull-repellent scent according to a traitional Spanish recipe, which normally sells at €9 (Euros) per unit. Normal production volume is 10,000 ounces per month. Average cost is €5 per ounce, of which €2 is direct material and €1 is variable conversion cost. This product is seasonal. After July, demand for this product drops to 6,000 ounces monthly. In November, Umberto offers to buy 1,500 ounces for €6,000. Assume that the order is received in July, peak season. If Pamela accepts the order, she will turn away regular customers who order 500 ounces. Pamela should:
Pamela in Pamplona makes bull-repellent scent according to a traditional Spanish recipe, which normally sells at €9 (Euros) per unit. Normal production volume is 10,000 ounces per month, and the maximum capacity is 10,800 ounces per month. Average cost is €5 per ounce, of which €2 is direct material and €1 is variable conversion cost (direct labor + variable conversion cost). This product is seasonal. After July, demand for this product drops to 6,000 ounces monthly. In July, Umberto offers to buy 1,800 ounces for €8,100. If Pamela accepts the order, she must design a special label for Umberto at a cost of €800. Each label will cost 30 cents to make and apply.lf Pamela accepts the order, she will turn away regular customers who order 800 ounces. Which of the following statements is correct? A. The opportunity cost of accepting the offer is €1.360 В. The opportunity cost of rejecting the offer is €4,800 C. The opportunity cost of accepting the offer is €7,500 • D. The opportunity cost…
Pamela in Pamplona makes bull-repellent scent according to a traditional Spanish recipe, which normally sells at €9 (Euros) per unit. Normal production volume is 10,000 ounces per month, and the maximum capacity is 10,800 ounces per month. Average cost is €5 per ounce, of which €2 is direct material and €1 is variable conversion cost (direct labor + variable conversion cost). This product is seasonal. After July, demand for this product drops to 6,000 ounces monthly. In July, Umberto offers to buy 1,800 ounces for €8,100. If Pamela accepts the order, she must design a special label for Umberto at a cost of €800. Each label will cost 30 cents to make and apply.If Pamela accepts the order, she will turn away regular customers who order 800 ounces. Which of the following statements is correct? .A. The opportunity cost of accepting the offer is €1,360 • B. The opportunity cost of rejecting the offer is €4,800 • C The opportunity cost of accepting the offer is €7,500 • D. The opportunity…
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