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Req. 22 for Question: Custom Fabric Ventures is a small company that produces fabric-based wardrobe accessories....

Req. 22 for Question: Custom Fabric Ventures is a small company that produces fabric-based wardrobe accessories.

Say Katie's Boutique has found an overseas manufacturer that would charge $45 per unit for the same handbag. Should Custom Fabric Ventures match the price of this competitor?

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Answer #1

Custom Fabric Ventures is a small company that produces fabric-based wardrobe accessories. Katie's Boutique has found an overseas manufacturer that would charge $45 per unit for the same handbag.

  • Custom Fabric Ventures cannot match the price of this competitor.
  • It costs Custom Fabric Ventures $48.44 to make each bag.
  • Selling the bags at $45 will result in a loss of company's current operations.

Moreover, it is important for Custom Fabric Ventures to keep business as much as it can, so the company may want to consider the allocation of MOH.

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