Q 27

Crane makes child-size backpacks for a total cost of $10 per unit ($6 per unit variable cost and $4 per unit fixed cost) and a unit selling price of $15. The company has been recently contacted by a local nonprofit to make the 640 child-size backpacks for a unit selling price of $10 per unit. Crane currently has available capacity to make and sell the 640 units without adding additional production capacity. What should Crane do regarding the special order proposal from the local nonprofit and why? O Reject the special order since the company would lose $5 per unit. O Reject the special order since the special-order price is equal to the total cost to make. O Accept the special order since it will increase operating income by $2560 or $4 per unit for 640 units. O Accept the special order since it is being performed for a nonprofit cause, and the $5 loss can be written off as a charitable contribution