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

Direct Materials$ 550,000

Direct Labour250,000

Variable Manufacturing Overhead100,000

Fixed Manufacturing Overhead400,000

Total$1,250,000

Creda also incurs selling expenses of $5 per bathroom sink. Wellington Corp. has offered Creda $195 per cabinet for a special order of 1,000 bathroom sinks. Creda has available capacity to do the work.

Instructions:

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

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