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provides landscaping services to corporations and businesses inier Company 11-3 Allits landscaping work requires Rainier to use landscaping equipment. Its landscap- ing equipment has the
provides landscaping services to corporations and businesses inier Company 11-3 Allits landscaping work requires Rainier to use landscaping equipment. Its landscap- ing equipment has the capacity to do 10,000 hours of landscaping work. It currently anticipates getting orders that would utilize 9,000 hours of equipment time. Rainier charges $80 per hour for landscaping work. Cost information for the current expected activity level is as follows: $720,000 Revenues ($80 X 9,000 hours) Variable landscaping costs (including materials and labor), which vary with the450,000 number of hours worked (S50 per hour x 9,000 hours) Fixed landscaping costs Variable marketing costs (5% of revenue) Fixed marketing costs Total costs Operating income 108,000 36,000 72,000 666,000 $54,000 In order to fill its available capacity, Rainier's salespersons are trying to find new business. Hudson Corporation wants Rainier to do 4,000 hours of landscaping work for $70 per hour. Variable servicing costs for the Hudson Corporation order are $45 per hour and variable marketing costs are 5% of revenues. Rainier can accept as much or as little of the 4,000 hours of Hudson's landscaping work. What should Rainier Corporation do
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