Question
Bradley Inc. has the capacity to make 100,000 windows. Bradley is currently operating at 80% capacity. The windows usually sell for $20.00 each. Costs for
Bradley Inc. has the capacity to make 100,000 windows. Bradley is currently operating at 80% capacity. The windows usually sell for $20.00 each. Costs for each window follow: Direct materials $ 5.00 Direct labor 3.00 Variable factory overhead 2.00 Fixed factory overhead 4.00 Total $14.00 The Army has offered to buy 10,000 windows for $12.00 each for barracks. Bradley should: a. Accept the offer because the company will realize $20,000 in additional contribution margin. b. Reject the offer because it currently does not have enough capacity to accept the order. c. Accept the offer because the company will realize $40,000 in additional contribution margin. d. Reject the order because the company will lose $20,000 on the order.
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