Special Order Desicion

Rayburn's Tents 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 cost are $100 for direct materials, $200 for direct labor, and $25 for other manufacturing costs.

- Facility-level costs of $80 are allocated to each tent

Rayburn's has received a special order for 1,500 tents at $308 each.

Required:

a) Should Rayburn's accept the special order? Support your answer with appropriate computations.

b) What qualitative factors should a company consider in deciding whether or not to accept a special order?