In your course textbook, specifically in Chapter 10, page 10-33, read Exercise 28, Dexter Manufacturing
In an appropriate level of detail, answer items 1 and 2 below.
Required:
Answer the following questions:
- How much in losses do you believe Dexter may have experienced on the current contract so far? How much more in losses might Dexter experience if the contract runs for its intended life? What information would you like to have from Dexter to do further analysis on this subject (be specific)?
- Are there any non-accounting issues Delta should consider in this case? If so, what are they (be specific)?
Select one of the following:
- What extra costs might Delta experience if it goes along with the Dexter proposal?
- What costs, other than the ones already mentioned, might Delta want to consider before it went forward with litigation against Dexter Manufacturing?
- If Delta did sue Dexter, what would be the basis for its damages claim in such a case? Be specific.