Reference no: EM133182671

Question - Franco, Inc., produces dental office examination chairs. Franco has the capacity to produce 9,000 chairs per year and currently is producing 6,000. Each chair retails for $13,000, and the costs to produce a single chair consist of direct materials of $3,000, direct labor of $3,000, and variable overhead of $1,000. Fixed overhead costs of $1,000,000 are met by selling the first 4,000 chairs. Franco has received a special order from Ghanem, Inc., to buy 700. Each chair is sold for $12,000 (selling price of one chair). There are no additional costs needed for this special order. What is the contribution margin for the special order?