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(a) Is it justified to reject the order? (b) Briefly explain four qualitative factors that are relevant when evaluating such type of decision.

(a) Is it justified to reject the order? (b) Briefly explain four qualitative factors that are relevant when evaluating such type of decision.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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 Kimberly Ltd manufactures and markets a Fizzy drink, which is sold for Rs 25 per can. Current output is 30,000 cans per month, which represent 60%of capacity. The company has the opportunity to utilize their surplus capacity by selling their product at Rs 16 per can to a supermarket chain. Total costs for the last month were Rs 550,000 , of which Rs 130,000 were fixed costs. The immediate reaction from the manager was to reject the order because total unit cost exceeds the special price. Required: (a) Is it justified to reject the order? (b) Briefly explain four qualitative factors that are relevant when evaluating such type of decision. 

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