solution

Samiha produces gauge barbed wire that is retailed through farm supply company.
Presently , the company has the capacity to produce 10,000 tons of wire per year . The cos ton of wire is as follows :
Direct material $ 520
Direct labor 40
Variable overhead 50
Fixed overhead 190
Total S800
Sales Price $ 900

Nishat has come up with an offer of buying 2.000 tons from Samiha for $ 630 per ton. This order will reduce fixed cost by 20 % and require a special machine of $ 5,000 that will not be used later Also , if this order is received regular sale of 2,000 tons will have to be forgone and only 8.000 will be sold . Should the special order from Nishat be accepted ?