Issue
Carson Planters (CP) is a small family-owned business that manufactures plastic pots for plants. Recently, Richard and Kathy, sole owners of CP, have received a large special order from a major national retail chain, subject to certain restrictive terms and conditions. They must decide whether to accept or reject the order.
Teaching Objectives
This clear and focused case is designed to introduce students to business decision-making. In the role as sole owners of CP, students must assess quantitatively whether to accept an order from a large supplier at a selling price lower than their firm’s current selling price. This case demonstrates that the quantitative analysis can be completed with an analysis of costs on a fixed/variable/contribution basis rather than on a full cost basis. Beyond the quantitative analysis, students must analyze acceptance or rejection of this offer from a qualitative standpoint, including the short-term and long-term ramifications on future orders and CP’s other retail chain customers.
Analysis required
Identification of fixed, variable, semi-variable, and step costs, projected statements, and differential analysis (optional).