6-9

Munchies Metal Works received an offer from a big-box retail company to purchase 3,400 metal outdoor tables for $230 each. Munchies Metal Works accountants determine that the following costs apply to the tables:

Direct material			$130
Direct labor			40
Manufacturing overhead			67
	Total		$237

Of the $67 of overhead, $15 is variable and $52 relates to fixed costs. The $52 of fixed overhead is allocated as $1.30 per direct labor dollar. What will be the real effect on profit if the order is accepted?

Will the profit increase or decrease? and by how much?