Exercise $4-27($Algo$)$ Special Orders $($LO $4-1,2)$

Nardin Outfitters has a capacity to produce $17,500$ of their special arctic tents per year. The company is currently producing and selling

$5,000$ tents per year at a selling price of $$1,450$ per tent. The cost of producing and selling one tent follows:

The company has received a special order for $1,600$ tents at a price of $$710$ per tent from Chipman Outdoor Center. It will not have to

pay any sales commission on the special order, so the variable selling and administrative costs would be only $$56$ per tent. The special

order would have no effect on total fixed costs. The company has rejected the offer based on the following computations:

Required:

a$.$ What is the impact on profit for the year if Nardin Outfitters accepts the special order?

b$.$ Do you agree with the decision to reject the special order?