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:

Rainier has received an order for landscaping work from Victoria Corporation at \($60\) per hour that would require 2,000 hours of equipment time. Variable landscaping costs for the Victoria Corporation order are \($50\) per hour and variable marketing costs are 5% of revenues. Rainier can either accept the Victoria offer in whole or reject it.
Should Rainier accept the offer?

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