Lansing Camera Company has received a special order for Photographic equipment that it does not normally produce. The company has spare capacity, and the order could be manufactured without reducing the production of the firm's regular products.
As the company's Operating Manager prepare a report for discussion at the management discussing calculating the cost of the special order and if the considering the following items;
Equipment used in producing the order has a book value of $2000. Lansing Camera has no other use for this equipment. If the order is not accepted, the equipment will be sold for $1500. If the equipment is used in producing the order, it can be in three months for $800
If the special order is accepted, the operation will require some of the storage space in the company's plant. If the space is used for this purpose, the company will rent storage space temporarily in the nearby warehouse at a cost of $18000. The building depreciation allocated to the storage space in producing the special order is $12000.