Perez Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Perezs normal sales territory, asks Perez to pour 46 slabs for Lancings new development of homes. Perez has the capacity to build 300 slabs and is presently working on 160 of them. Lancing is willing to pay only $2,550 per slab. Perez estimates the cost of a typical job to include unit-level materials, $940; unit-level labor, $510; and an allocated portion of facility-level overhead, $1,170.

Required

Calculate the contribution to profit from the special order.

Should Perez accept or reject the special order to pour 46 slabs for $2,550 each?

Vernon Company manufactures a personal computer designed for use in schools and markets it under its own label. Vernon has the capacity to produce 32,000 units a year but is currently producing and selling only 15,000 units a year. The computers normal selling price is $1,780 per unit with no volume discounts. The unit-level costs of the computers production are $510 for direct materials, $290 for direct labor, and $190 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Vernon during the year are expected to be $2,290,000 and $810,000, respectively. Assume that Vernon receives a special order to produce and sell 3,080 computers at $1,210 each.

Required

Calculate the contribution to profit from the special order.

Should Vernon accept or reject the special order?