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Fence Pro Company sells several types of fencing

Accounting

Fence Pro Company sells several types of fencing. One type, premium fencing, regularly sells for $120 per foot. A customer wants to purchase 1,500 feet of premium fencing at $75 per foot to use as a charitable donation to organizations that build homes for the homeless. Fence Pro's costs per foot of premium fencing sold to regular customers are as follows: Direct $32 materials Direct labor $22 Variable $10 overhead Fixed $10 overhead Sales commissions $3 The customer would also like to customize the fencing. The cost of the customization is $5 per foot. and a special machine costing $12,000 would be required to perform the customization. After the order is complete the machine would be scrapped (i.e., the machine has no salvage value). Assume no sales commissions would be incurred for the special order and the company can provide the fencing for the special order without interfering with sales to regular customers. Fixed costs at Fence Pro are unavoidable. Should this special order be accepted and why? Yes, income will increase by $1,500 Yes, income will increase by $4,500 No, income will decrease by $1,500 No, income will decrease by $3,000 None of the above

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