Terrain Tents makes backpacking tents. It has the capacity to produce 10,000 tents per year and currently
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Terrain Tents makes backpacking tents. It has the capacity to produce 10,000 tents per year and currently is producing and selling 7,000 tents. Normal selling price for a tent is $450. Unit-level costs are $90 for direct materials, $220 for direct labor, and $15 for other manufacturing costs. Facility-level costs of $110 are allocated to each tent. Terrain has received a special order for 2,500 tents at $320 each.
Should Terrain accept the special order? Support your answer with appropriate computations.
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