Palmer Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 22,000 trophies each month; current monthly production is 20,900 trophies. The company normally charges $62 per trophy. Cost data for the current level of production are shown below.
Variable Costs
Direct Materials..................$541,880
Direct Labor......................$193,800
Selling and Administrative.......$41,100
Fixed Costs
Manufacturing....................$250,000
Selling and Administrative......$133,000
The company has just received a special one-time order for 800 trophies at $31 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Provide numerical support for your decision.