Final answer:
More information is needed to determine if Splish Co. should accept a special order at a discounted rate. For WipeOut Ski Company, profitability depends on the comparison of selling price with average cost, and the marginal unit adds to profit if its cost is less than the selling price.
Step-by-step explanation:
Deciding whether Splish Co. should accept a special order at a 25% discount involves comparing the special order price to the company's production cost. Without knowing Splish Co.'s production cost or the standard selling price, it's impossible to make an accurate determination. Generally, if the special order price covers the variable costs and contributes to fixed costs and profits, it might be beneficial to accept the order. However, more information is needed in this case.
In the example provided for the WipeOut Ski Company, if the firm produces 5 units at a price of $25 each, the firm's profits or losses depend on the total costs. To determine if the company is profitable at a glance, you compare the selling price to the average cost per unit. If the selling price is higher, the company is profitable. Lastly, whether the marginal unit produced adds to profits depends on if the marginal cost of producing one more unit is less than the selling price.