Weihai-Daewoo Electronics Co., Ltd‪.‬

Weihai-Daewoo Electronics Co., Ltd., a joint venture between a Chinese company and Daewoo Electronics Co., Ltd., of Korea, is one of the leading colour monitor manufacturers in China. The company has the opportunity to secure new business through an open bidding process. However, the price asked for is lower than Weihai-Daewoo's cost of production using the full-cost method. The company needs the business and the chief executive officer believes that a long-term relationship could be profitable. He must decide whether to accept the order and examine the company's cost calculation system.