Creda Company produces bathroom sink for home builders in Seattle. The cost of producing 5,000 bathroom sinks is as follows:

Direct Materials $ 505,000

Direct Labour 255,000

Variable Manufacturing Overhead 100,000

Fixed Manufacturing Overhead 400,000

Total $1,250,000

Creda also incurs selling expenses of $6 per bathroom sink. Wellington Corp. has offered Creda $170 per cabinet for a special order of 1,000 bathroom sinks. Creda has available capacity to do the work.

Instructions:

(a). Prepare an incremental analysis for the special order.

(b). Should Creda accept the special order? Why or why not?