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. Rainier charges \($80\) per hour for landscaping work. Cost information for the current expected activity level is as follows:

In order to fill its available capacity, Rainier’s salespersons are trying to find new business.
Hudson Corporation wants Rainier to do 4,000 hours of landscaping work for \($70\) per hour. Variable servicing costs for the Hudson Corporation order are \($45\) per hour and variable marketing costs are 5% of revenues. Rainier can accept as much or as little of the 4,000 hours of Hudson’s landscaping work. What should Rainier Corporation do?

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Revenues ($80 9,000 hours) $720,000 Variable landscaping costs (including materials and labor), which vary with the 450,000 number of hours worked ($50 per hour x 9,000 hours) Fixed landscaping costs 108,000 Variable marketing costs (5% of revenue) 36,000 Fixed marketing costs 72,000 Total costs Operating income 666,000 $ 54,000