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The Nature Company provides landscaping services to corporations and businesses. All its landscaping work requires Nature to use landscaping equipment. Its landscaping equipment has the
The Nature Company provides landscaping services to corporations and businesses. All its landscaping work requires Nature to use landscaping equipment. Its landscaping equipment has the capacity to do 15,000 hours of landscaping work. It currently anticipates getting orders that would utilize 10,500 hours of equipment time from existing customers. Nature charges $110 per hour for landscaping work. Cost information for the current expected activity level is as follows: Begin by completing an analysis, and start by showing the computation of the company's operating income without the special order. Next, calculate operating income with the special order, and then determine whether Nature should accept or reject the special order. Data table Requirement Nature has received an order for landscaping work from Donna Corporation at $70 per hour that would require 2,900 hours of equipment time. Variable landscaping costs for the Donna Corporation order are $75 per hour and variable marketing costs are 5% of revenues. Nature can either accept the Donna offer in whole or reject it. Should Nature accept the offer
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