Asked by Emily Ratliff on Jun 09, 2024
Verified
Piper Rose Boutique has been approached by the community college to make special polo shirts for the faculty and staff. The college is willing to buy 4,000 polos with its own design for $6.00 each. The company normally sells its shirts for $12.00 each. The company has enough excess capacity to make this order. A breakdown of the costs is as follows: 
Should Piper Rose Boutique accept the special order made by the college? Show computations, but a formal differential analysis report is not required.
Excess Capacity
The available production capability that exceeds the current demand for products or services.
Differential Analysis
This analysis involves comparing the costs and benefits of alternative business decisions, focusing on the differences in outcomes under each option.
- Examine decisions related to special orders and the importance of differential analysis in the context of management decision-making.
- Identify the differences between fixed and variable costs when making pricing choices.
Verified Answer
LW
Logan WurtzJun 11, 2024
Final Answer :
Yes, Piper Rose Boutique should accept the special order, determined as follows: 
Learning Objectives
- Examine decisions related to special orders and the importance of differential analysis in the context of management decision-making.
- Identify the differences between fixed and variable costs when making pricing choices.