Problem: Module $6$ Textbook Problem $3$

Learning Objective: $6-2$ Make appropriate special order decisions

Rundle Company manufactures a personal computer designed for use in schools and markets it under its own label. Rundle has the capacity to produce $31,000$ units a year but is currently producing and selling only $19,000$ units a year. The computer's normal selling price is $$1,610$ per unit with no volume discounts. The unit$-$level costs of the computer's production are $$570$ for direct materials, $$250$ for direct labor, and $$130$ for indirect unit$-$level manufacturing costs. The total product$-$ and facility$-$level costs incurred by Rundle during the year are expected to be $$2,290,000$ and $$800,000,$ respectively. Assume that Rundle receives a special order to produce and sell $3,070$ computers at $$1,200$ each.

Required

Calculate the contribution to profit from the special order. Should Rundle accept or reject the special order?

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