LO $6-2$

Exercise $6-7$B Special order decision

Wilcox Automotive Company manufactures an engine designed for motorcycles and markets the product using its own brand name. Although Wilcox has the capacity to produce $50,000$ engines annually, it currently produces and sells only $30,000$ units per year. The engine normally sells for $$540$ per unit, with no quantity discounts. The unit$-$level costs to produce the engine are $$192$ for direct materials, $$180$ for direct labor, and $$36$ for indirect manufacturing costs. Wilcox expects total annual product$-$ and facility$-$level costs to be $$648,000$ and $$900,000,$ respectively. Assume Wilcox receives a special order from a new customer seeking to buy $1,000$ engines for $$384$ each.

Required

Page $295$

Should Wilcox accept or reject the special order? Support your answer with appropriate computations.