Crane Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,090,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows.

		Per Undergarment			Total
Direct materials		$1.94			$2,114,600
Direct labor		0.59			643,100
Variable manufacturing overhead		1.07			1,166,300
Fixed manufacturing overhead		1.46			1,591,400
Variable selling expenses		0.32			348,800
Totals		$5.38			$5,864,200

The U.S. Army has approached Crane and expressed an interest in purchasing 249,400 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.01 per undergarment to cover all other costs and provide a profit. Presently, Crane is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Crane accepts the Armys offer, it will not incur any variable selling expenses related to this order. Prepare an incremental analysis for the Crane. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Reject Order		Accept Order		Net Income Increase (Decrease)
Revenues		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Variable costs:
Direct materials		enter a dollar amount		enter a dollar amount		enter a dollar amount
Direct labor		enter a dollar amount		enter a dollar amount		enter a dollar amount
Variable overhead		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total variable costs		enter a total dollar amount		enter a total dollar amount		enter a total dollar amount
Net income		$enter a total dollar amount for net income		$enter a total dollar amount for net income		$enter a total dollar amount for net income

Should Crane accept the Army's offer?

Crane should select an option acceptreject the Armys offer.

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