Question
Rayburn's Tents makes backpacking tents. It has the capacity to produce 10,000 tents per year and currently is producing and selling 7,000 tents. Normal selling
Rayburn's Tents makes backpacking tents. It has the capacity to produce 10,000 tents per year and currently is producing and selling 7,000 tents. Normal selling price for a tent is $470. Unit-level costs per tent are $100 for direct materials, $200 for direct labor, and $25 for other unit-level manufacturing costs. The company also pays rent (fixed cost) on the factory in the amount of $18,000 per year. Rayburn's has received a one-time special order from an organization which is not a regular customer. The special order is for 1,500 tents at a price of $340 each. Prepare an analysis that indicates whether the special order should be accepted or rejected and what the change in net income would be.
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