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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 38,000
Perez Company manufactures a personal computer designed for use in schools and markets it under its own label. Perez has the capacity to produce 38,000 units a year but is currently producing and selling only 19,000 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 $460 for direct materials, $260 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 $2,150,000 and $817,000, respectively. Assume that Perez receives a special order to produce and sell 3,140 computers at $1,250 each. Required Calculate the contribution to profit from the special order. Should Perez accept or reject the special order
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