You are the chief financial officer for a firm that sells digital music players. your firm has the following average-total-cost schedule:

quantity average total cost
600 players $300
601 301

your current level of production is 600 devices, all of which have been sold. someone calls, desperate to buy one of your music players. the caller offers you $550 for it. should you accept the offer? why or why not?

T-comm makes a variety of products. it is organized in two divisions, north and south. the managers for each division are paid, in part, based on the financial performance of their divisions. the south division normally sells to outside customers but, on occasion, also sells to the north division. when it does, corporate policy states that the price must be cost plus 20 percent to ensure a "fair" return to the selling division. south received an order from north for 300 units. south's planned output for the year had been 1,200 units before north's order. south's capacity is 1,500 units per year. the costs for producing those 1,200 units follow