Gibson Company manufactures a personal computer designed for use in schools and markets it under its own label. Gibson has the capacity to produce 39,000 units a year but is currently producing and selling only 17,000 units a year. The computers normal selling price is $1,700 per unit with no volume discounts. The unit-level costs of the computers production are $550 for direct materials, $130 for direct labor, and $160 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Gibson during the year are expected to be $2,240,000 and $810,000, respectively. Assume that Gibson 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 Gibson accept or reject the special order?

Gibson Company manufactures a personal computer designed for use in schools and markets it under its own label. Gibson has the capacity to produce 39,000 units a year but is currently producing and selling only 17,000 units a year. The computer's normal selling price is $1,700 per unit with no volume discounts. The unit-level costs of the computer's production are $550 for direct materials, $130 for direct labor, and $160 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Gibson during the year are expected to be $2,240,000 and $810,000, respectively. Assume that Gibson 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 Gibson accept or reject the special order? Contribution to profit Should Gibson accept or reject the special order