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Maccoa Soft, a division of Zayer Software Company, produces and distributes an automated payroll software system. A contribution margin format income statement for Maccoa Soft
Maccoa Soft, a division of Zayer Software Company, produces and distributes an automated payroll software system. A contribution margin format income statement for Maccoa Soft for the past year follows. Page 503 Revenue (12,000 units x $1,200) $14,400,000 Unit-level variable costs Product materials cost (12,000 x $60) (720,000) Installation labor cost (12,000 x $200) (2,400,000) Manufacturing overhead (12,000 x $2) (24,000) Shipping and handling (12,000 x $25) (300,000) Sales commissions (12,000 x $300) (3,600,000) Nonmanufacturing miscellaneous costs (12,000 x $5) (60,000) 7,296,000 Contribution margin (12,000 x $608) Fixed costs Research and development (2,700,000) Legal fees to ensure product protection (780,000) Advertising costs (1,200,000) Rental cost of manufacturing facility (600,000) Depreciation on production equipment (zero market value) (300,000) Other manufacturing costs (salaries, utilities, etc.) (744,000) Division-level facility sustaining costs (1,730,000) Allocated companywide facility-level costs (1.650.000) Net loss $(2,408,000) Assume that Maccoa has excess capacity. The sales staff has identified a large franchise company with 200 outlets that is interested in Maccoa's software system but is willing to pay only $800 for each system. Ignoring qualitative (1) considerations, should Maccoa accept the special order? Representatives from Section 1 should respond to the following: The analysis related to the special order (Task 1) suggests that all variable costs are always relevant. Is this conclusion valid? Explain your
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