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Munoz Company manufactures a personal computer designed for use in schools and markets it under its own label. Munoz has the capacity to produce 43,000
Munoz Company manufactures a personal computer designed for use in schools and markets it under its own label. Munoz has the capacity to produce 43,000 units a year but is currently producing and selling only 13,000 units a year. The computer's normal selling price is $1,620 per unit with no volume discounts. The unit-level costs of the computer's production are $600 for direct materials, $120 for direct labor, and $120 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Munoz during the year are expected to be $2,170,000 and $811,000, respectively. Assume that Munoz receives a special order to produce and sell 3,140 computers at $1,220 each. Required Calculate the contribution to profit from the special order. Should Munoz accept or reject the special order
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