Dapper Dan Produces a Man's Suit That Sells for $200

question 20

Essay

Dapper Dan produces a man's suit that sells for $200.Although the company's production capacity is 3,000 suits per year,only 2,500 suits are currently being produced and sold.At this level of production,the company incurs the following costs: $\begin{array}{|l|r|}\hline \text { Unit-level material cost per suit } & \$ 80 \\\hline \text { Unit-level labor cost per suit } & \$ 40 \\\hline \text { Unit-level overhead per suit } & \$ 20 \\\hline \text { Batch-level set-up cost for each batch of } 500 \text { suits } & \$ 1,200 \\\hline \text { Annual product-level costs } & \$ 15,000 \\\hline \text { Allocated facility-level costs } & \$ 50,000\\\hline\end{array}$ Easton Clothiers has offered to purchase 500 suits as a one-time special purchase at a price of $135.
Required:
Prepare a quantitative analysis that indicates whether the special order should be accepted.