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Special Order Decision: Operating with Idle Capacity. Sports Gear Company currently produces 20,000 jerseys a year for its regular customers and charges $12 per jersey.

Special Order Decision: Operating with Idle Capacity.

Sports Gear Company currently produces 20,000

jerseys a year for its regular customers and charges $12 per jersey. Sports Gear Company has capacity to

produce an additional 10,000 jerseys if sales grow in the future. Variable costs total $8 per jersey and

annual fixed costs total $30,000. Castro City recently approached the company and proposed a one-time

purchase of 6,000 jerseys for $10 each. Should Sports Gear Company accept the proposal?

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