Final answer:
Viking Corporation should consider accepting Wholesaler Z's offer, as it results in a higher profit margin per unit sold compared to Wholesaler Y's offer, though both offers are above the marginal cost of $100 per unit and thus profitable.
Step-by-step explanation:
To determine which offer Viking Corporation should accept, we need to compare the marginal revenue from each wholesaler's offer to the marginal cost of producing additional units. Since Viking Corporation operates at 80% of capacity producing 8,000 units, it has the capacity to produce additional units without increasing fixed costs. With a variable cost of $100 per unit, any offer above this price will result in a positive contribution margin.
For Wholesaler Y's offer of 2,000 units at $120 per unit, the marginal revenue is $120. Since marginal cost is $100 per unit, Viking would make a profit of $20 per unit, resulting in a total additional profit of $40,000.Wholesaler Z's offer of 1,500 units at $140 per unit would result in a marginal revenue of $140 per unit, exceeding the $100 marginal cost and providing a profit of $40 per unit, or a total additional profit of $60,000.
Hence, both offers would be profitable for Viking Corporation, but the offer from Wholesaler Z yields a higher profit margin per unit and should be preferred if only one offer can be accepted and if the capacity constraints allow for the production of the required number of units.