Exercise 6-6A Special order decision LO 6-2

Gibson Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Gibsons normal sales territory, asks Gibson to pour 48 slabs for Lancings new development of homes. Gibson has the capacity to build 470 slabs and is presently working on 200 of them. Lancing is willing to pay only $2,590 per slab. Gibson estimates the cost of a typical job to include unit-level materials, $910; unit-level labor, $460; and an allocated portion of facility-level overhead, $1,260.

Required

Calculate the contribution to profit from the special order. Should Gibson accept or reject the special order to pour 48 slabs for $2,590 each?