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Problem: Module 6 Textbook Problem 3 Learning Objective: 6-2 Make appropriate special order decisions Vernon Company manufactures a personal computer designed for use in schools
Problem: Module 6 Textbook Problem 3 Learning Objective: 6-2 Make appropriate special order decisions Vernon Company manufactures a personal computer designed for use in schools and markets it under its own label. Vernon has the capacity to produce 40,000 units a year but is currently producing and selling only 11,000 units a year. The computer's normal selling price is $1,750 per unit with no volume discounts. The unit-level costs of the computer's production are $520 for direct materials, $240 for direct labor, and $110 for indirect unit-level manufacturing costs. The total product-and facility-level costs incurred by Vernon during the year are expected to be $2,110,000 and $817,000, respectively. Assume that Vernon receives a special order to produce and sell 3,120 computers at $1,250 each. Required Calculate the contribution to profit from the special order. Should Vernon accept or reject the special order
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