Should avery accept or reject the special order

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Question - Avery textile company manufactured high quality bed sheets and sells them in sets to a well known retail company for $80 a set. Avery has sufficient capacity to produce 150,000 sets of sheets annually; the retail company currently purchases 100,000 sets each year. Averys unit level cost is $45 per set and its fixed cost is $1,050,000 per year.  A motel chain has offered to purchase 15,000 sheet sets from avery for $56.25 per set. If avery accepts the order, the contract will prohibit the motel chain from reselling the bed sheets.

Required - Should Avery accept or reject the special order? Support your answer with appropriate computations.

Reference no: EM133062181

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