Preston Wade, a local craftsman, normally sells his handcrafted

| August 30, 2017

Question
Preston Wade, a local craftsman, normally sells his handcrafted wooden birdhouses for $145 each. Preston has the capacity to produce as many as 60 birdhouses a week. In a normal week, Preston makes 20 birdhouses with the following costs per unit: Direct materials $12.00 Direct labor $15.00 Variable overhead $3.00 Fixed overhead $5.00 Refer to the Preston Wade information above. Preston has received a special order from a local plant nursery to purchase 40 birdhouses for a price of $80 each. The nursery wishes to have the birdhouses engraved with their own logo, therefore, the order would require the rental of a special engraving tool at a cost of $250. If Preston accepts the special order, net income will increase by:

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