Problem: Module $6$ Textbook Problem $3$

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

Zachary Company manufactures a personal computer designed for use in schools and markets it under its own label. Zachary 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 $$1,660$ per unit with no volume discounts. The unit$-$level costs of the computer's production are $$460$ for direct materials, $$260$

for direct labor, and $$180$ for indirect unit$-$level manufacturing costs. The total product$-$ and facility$-$level costs incurred by Zachary

during the year are expected to be $$2,180,000$ and $$801,000,$ respectively. Assume that Zachary receives a special order to produce

and sell $3,130$ computers at $$1,240$ each.

Required

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

Contribution to profit

Should Zachary accept or reject the special order?