Chapter 13 In-Class Case Thompson Time Masters produced and sold 30,000 alarm clocks last year. Thompson's profit report follows: $600,000 Sales (30,000 units) Less: Direct materials Direct labor Unit-related overhead Selling costs Contribution margin Less: Batch-related costs Product-sustaining costs Facility-sustaining costs Profit 210,000 150,000 90,000 30,000 $120,000 12,000 10,000 94,000 $ 4,000 This year Thompson again expects to sell 30,000 alarm clocks through normal channels. In addition, a hotel management company wants to place an order for 5,000 clocks for a new hotel being built; however, the company wants a 20 percent discount on the normal selling price. The selling cost per unit will not be incurred on this order because no commission will be paid. One additional production run will be required at a cost of $2,000. Product sustaining costs will not be incurred. Thompson has the capacity to produce the additional 5,000 clocks. 1. Should Thompson accept or reject the special order? 2. Discuss additional factors Thompson should consider before accepting or rejecting this offer