Zachary Company manufactures a personal computer designed for use in schools and markets it under its own label. Zachary has the capacity to produce 43,000 units a year but is currently producing and selling only 17,000 units a year. The computers normal selling price is $1,730 per unit with no volume discounts. The unit-level costs of the computers production are $580 for direct materials, $190 for direct labor, and $190 for indirect unit-level manufacturing costs. The total product- and facility-level costs incurred by Zachary during the year are expected to be $2,200,000 and $816,000, respectively. Assume that Zachary receives a special order to produce and sell 3,150 computers at $1,290 each.

Required

Calculate the contribution to profit from the special order. Should Zachary accept or reject the special order?

Contribution to profit Should Zachary accept or reject the special order