Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a...
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Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $100. Given its experience, Leno believes the All-Body suit would have the following manufacturing costs.
| Direct materials | $25 | ||
| Direct labor | 30 | ||
| Manufacturing overhead | 45 | ||
| Total costs | $100 |
(a2) Under what circumstances might Leno consider manufacturing the All-Body swimsuit given this approach?
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