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Return to question Exercise 6-7A (Algo) Special order decision LO 6-2 Solomon Company manufactures a personal computer designed for use in schools and markets
Return to question Exercise 6-7A (Algo) Special order decision LO 6-2 Solomon Company manufactures a personal computer designed for use in schools and markets it under its own label. Solomon has the capacity to produce 33,000 units a year but is currently producing and selling only 14,000 units a year. The computer's normal selling price is $1,640 per unit with no volume discounts. The unit-level costs of the computer's production are $410 for direct materials, $270 for direct labor, and $120 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Solomon during the year are expected to be $2,270,000 and $814,000, respectively. Assume that Solomon receives a special order to produce and sell 3,070 computers at $1,260 each. Required Calculate the contribution to profit from the special order. Should Solomon accept or reject the special order? Answer is complete but not entirely correct. Contribution to profit Should Solomon accept or reject the special order? 2,548,100 Accept
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