QS $19-21($Algo$)$ Analyze special order LO P$3$

Li Company produces a product that sells for $$88$ per unit. The product cost per unit using absorption costing is $$70.$ A customer

contacts Li and offers to purchase $2,400$ units of this product for $$72$ per unit. Variable costs of goods sold with this order would be

$$32$ per unit, and variable selling and administrative costs would be $$20$ per unit. This special order would not require any additional

fixed costs, and Li has sufficient capacity to produce this special order without affecting regular sales.

$($a$)$ Compute contribution margin for this special order.

$($b$)$ Should Li accept this special order?

Complete this question by entering your answers in the tabs below.

Compute contribution margin for this special order.

Special Order Analysis