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REI has the capacity to produce 12,500 tents per year and currently is producing and selling 8,500 tents. Normal selling price for a tent
REI has the capacity to produce 12,500 tents per year and currently is producing and selling 8,500 tents. Normal selling price for a tent is $480. Unit-level costs are $120 for direct materials, $250 for direct labor, and $45 for other manufacturing costs. Facility-level costs of $140 are allocated to each tent. REI has received a special order for 4,000 tents at $350 each. Required: 1. Compute the contribution to income of the special order using the format: Differential revenue- avoidable costs contribution to income. 2. Should REI accept the special order? Why or why not?
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