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Harcourt Manufacturing (HM) has the capacity to produce 11,800 fax machines per year. HM currently produces and sells 8,800 units per year. HM currently leases

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Harcourt Manufacturing (HM) has the capacity to produce 11,800 fax machines per year. HM currently produces and sells 8,800 units per year. HM currently leases its excess capacity for a rental fee of $88,000. The fax machines normally sell for $280 each. Modem Products has offered to buy 3,800 fax machines from HM for $150 each. Unit-level costs associated with manufacturing the fax machines are $51 each for direct labor and $76 each for direct materials. Product-level and facility-level costs are $68,000 and $83,000, respectively. Based on this information (ignore qualitative characteristics) Multiple Choice HM should reject the offer because accepting it will reduce profitability by $600. HM should accept the offer because accepting it will contribute $11,800 to profit. HM should reject the offer because accepting it will reduce profitability by $11,800. O HM should accept the offer because accepting will contribute $88,000 to profit

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