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Perez Company manufactures a personal computer designed for use in schools and markets it under its own label. Perez has the capacity to produce 25,000
Perez Company manufactures a personal computer designed for use in schools and markets it under its own label. Perez has the capacity to produce 25,000 units a year but is currently producing and selling only 16,000 units a year. The computer's normal selling price is $1,770 per unit with no volume discounts. The unit-level costs of the computer's production are $550 for direct materials, $170 for direct labor, and $110 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Perez during the year are expected to be $2,140,000 and $802,000, respectively. Assume that Perez receives a special order to produce and sell 3,000 computers at $1,220 each. Required Calculate the contribution to profit from the special order. Should Perez accept or reject the special order? Contribution to profit Should Perez accept or reject the special order
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