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Rundle Company manufactures a personal computer designed for use in schools and markets it under its own label. Rundle has the capacity to produce
Rundle Company manufactures a personal computer designed for use in schools and markets it under its own label. Rundle has the capacity to produce 31,000 units a year but is currently producing and selling only 11,000 units a year. The computer's normal selling price is $1,690 per unit with no volume discounts. The unit-level costs of the computer's production are $510 for direct materials, $130 for direct labor, and $130 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Rundle during the year are expected to be $2,190,000 and $812,000, respectively. Assume that Rundle receives a special order to produce and sell 3,160 computers at $1,280 each. Required Calculate the contribution to profit from the special order. Should Rundle accept or reject the special order? Contribution to profit Should Rundle accept or reject the special order?
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