question 2 kirin limited produces and sells wheelie bins to local auth
Kirin Limited produces and sells wheelie bins to local authorities and recycling
companies. The company has capacity to produce 40,000 units but annual production
and demand is currently limited by the market to 25,000 wheelie bins per year. The
total costs of producing 25,000 wheelie bins are as follows:
Total cost of 25,000 wheelie bins
The selling price of each wheelie bin is £25.
An order is received from Matt Waste Disposal for 5,000 wheelie bins at a price of £22 each.
Explain, with reasons, whether Kirin Limited should accept this order or not. Explain what
possible adverse consequences there would be in accepting this new order.
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