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.
Required:
Should Terrain accept the special order? Support your answer with appropriate computations.

Question

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The Answer of 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.
Required:
Should Terrain accept the special order? Support your answer with appropriate computations.

Terrain Tents Makes Backpacking Tents