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How would you find the answer for whether Earth Baby Inc. should accept the proposed venture from GDI or not?

CoursHeroTranscribedText: 1125 Special Order Earth Baby Inc. (EBI) recently celebrated its 10th anniversary. The company produces organic baby products for healthconscious parents. These products include food, clothing, and toys. Earth Baby recently introduced a new line of premium organic baby foods. Extensive research and scientic testing indicate that babies raised on the new line of foods will have substantial health benets. EBI is able to sell its products at prices higher than those charged by its competitors because of its excellent reputation for superior products. EBI distributes its products through highend grocery stores, pharmacies. and specialty retail baby stores. Joan Alvarez, the founder and CEO of EBI, recently received a proposal from an old business school classmate, Robert Bradley. the vice president of Great Deal Inc. (GDI), a large discount retailer. Mr. Bradley proposes a joint venture between his company and EBI, citing the growing demand for organic products and the superior distribution channels of his organization. Under this venture EBI would make some minor modifications to the manufacturing process of some of its bestselling baby foods, and the foods would then be packaged and sold by GDI. Under the agreement, EBI would receive $3.10 per jar of baby food and would provide GDI a limited right to advertise the product as manufactured for Great Deal by EBI. Joan Alvarez set up a meeting with Fred Stanley, Earth Baby's CFO. to discuss the profitability of the venture. Mr. Stanley made some initial calculations and determined that the direct materials. direct labor. and other variable costs needed for the GDI order would be about $2 per unit as compared to the full cost of $3 (direct materials, direct labor, and manufacturing overhead) for the equivalent EBI product

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