Crane Fiber 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 1,065,000 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		$2.04			$2,172,600
Direct labor		0.42			447,300
Variable manufacturing overhead		1.00			1,065,000
Fixed manufacturing overhead		1.53			1,629,450
Variable selling expenses		0.32			340,800
Totals		$5.31			$5,655,150

The U.S. Army has approached Crane Fiber and expressed an interest in purchasing 249,000 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 $1.05 per undergarment to cover all other costs and provide a profit. Presently, Crane Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Crane Fiber accepts the Armys offer, it will not incur any variable selling expenses related to this order. Prepare an incremental analysis for the Crane Fiber. (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 subtotal of the three previous amounts		enter a subtotal of the three previous amounts		enter a subtotal of the three previous amounts
Net income		$enter the net income in dollars		$enter the net income in dollars		$enter the net income in dollars

Should Crane Fiber accept the Army's offer?

Crane Fiber should select an option rejectaccept the Armys offer.