The Transit Transportation Company has the following operating results to date for 2006:

A large Toronto manufacturer has inquired about whether Transit would be interested in trucking a large order of its parts to Vancouver. Steven Minkler, operations manager, investigated the situation and estimated that the “fully allocated”
costs of servicing the order would be $40,000. Using his general pricing formula, he quoted a price of $50,000. The manufacturer replied: “We'll give you $37,000, take it or leave it. If you do not want our business, we'll truck it ourselves or go elsewhere.”
A cost analyst had recently been conducting studies of how Transit’s operating costs tended to behave. She found that $32 million of the $40 million could be characterized as variable costs. Minkler discussed the matter with her and decided that this order would probably generate cost behaviour little different from Transit’s general operations.
1. Using a contribution format, prepare an analysis for Minkler.
2. Should Transit accept the order? Explain.

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Operating revenues $50,000,000 Operating costs 40,000,000 Operating income $10,000,000