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Jupiter Corporation manufactures skateboards. Several weeks ago, the firm received a specialorder inquiry from Vnus, Ine. Venus desires to market a sknteboard similar to one of Jupiter's and has offered to purchase 11,000 units if the order can be completed in three months. The cost data for Jupiter's model no. 43 skateboard follow. Additional data: - The normal selline price of model no 43 is $26.50, however. Venus has offered Jupiter only $15.75 because of the large Page652 quantity it is willine to purchase. - Venus requires a modification of the desien that will allow a \$2.10 reduction in direct-material cost. - Jupiter's production supervisor notes that the company will incur $3,700 in additional setup costs and will have to purchase a $2,400 special device to manufneture these units. The device will be discanded ance the specinl-order is completed - Total manufacturing overhead costs are applied to produetion at itie rate of $20 per miachirie hour. Thisi figure is batied, in part, on budeeted yearty fexed overhead or $570.000 and planned production activity of 60.000 machine hours ( 5.000 per manth) - Jupiter will allocate $1,800 of existine fixed administrative costs to the onder as ". part of the cozt of doine business." Required: 1. Assume that present sales will not be affected. Should the order be accepted from n financial point of view (i.e.., is it profitible)? Why? Show calculations 2. Acume that Juphter'o eurrent production activity conaumes 70 percem of planned machine hour activity Can the company aceept ihe onder and meel Venus's dendline? 3. What options mieht Jupiter consider if management truly wamted co do business with Venus in hopes of buildine a long-term relationship with the firm

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