Question
Exercise 6-7A Special order decision LO 6-2 Solomon Company manufactures a personal computer designed for use in schools and markets it under its own label.
Exercise 6-7A Special order decision LO 6-2 Solomon Company manufactures a personal computer designed for use in schools and markets it under its own label. Solomon has the capacity to produce 27,000 units a year but is currently producing and selling only 14,000 units a year. The computers normal selling price is $1,790 per unit with no volume discounts. The unit-level costs of the computers production are $560 for direct materials, $280 for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Solomon during the year are expected to be $2,130,000 and $813,000, respectively. Assume that Solomon receives a special order to produce and sell 3,150 computers at $1,250 each. Required Calculate the contribution to profit from the special order. Should Solomon accept or reject the special order?
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