LO $6-2$

Exercise $6-6$B Special order decision

Avery Textile Company manufactures high$-$quality bed sheets and sells them in sets to a well$-$known retail company for $$80$ a set. Avery has sufficient capacity to produce $150,000$ sets of sheets annually; the retail company currently purchases $100,000$ sets each year. Avery's unitlevel cost is $$45$ per set and its fixed cost is $$1,050,000$ per year. A motel chain has offered to purchase $15,000$ sheet sets from Avery for $$56\mathrm{.}25$ per set. If Avery accepts the order, the contract will prohibit the motel chain from reselling the bed sheets.

Required

Should Avery accept or reject the special order? Support Your answer with appropriate computations.