The Rainier Company provides landscaping services to corporations and businesses. All its landscaping work requires Rainier to use landscaping equipment. Its landscaping equipment has the capacity to do 10,000 hours of landscaping work. It currently anticipates getting orders that would utilize 9,000 hours of equipment time from existing customers. Rainier charges $80 per hour for landscaping work. Cost information for the current expected activity level is as follows:

Revenues ($80 x 9,000 hours) $720,000

Variable landscaping costs (including materials and labor), which vary 450,000

with the number of hours worked ($50 per hour x 9,000 hours)

Fixed landscaping costs 108,000

Variable marketing costs (5% of revenues) 36,000

Fixed marketing costs 72,000

Total costs 666,000

Operating income $54,000

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

RainierRainier

should accept or reject the special order.

		Without
		One-Time Only
		Special Order
Relevant revenues
Relevant variable costs:
	Landscaping costs
	Marketing costs
Total relevant costs
Relevant operating income

With

One-Time Only

Special Order

Rainier should			the special order from Victoria Corporation because operating income will
by $		.