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Custom Metal Works received an offer from a big-box retail company to purchase 3,000 metal outdoor tables for $220 each. Custom Metal Works accountants determine
Custom Metal Works received an offer from a big-box retail company to purchase 3,000 metal outdoor tables for $220 each. Custom Metal Works accountants determine that the following costs apply to the tables:
Direct material | $125 | |||
Direct labor | 50 | |||
Manufacturing overhead | 70 | |||
Total | $245 |
Of the $70 of overhead, $14 is variable and $56 relates to fixed costs. The $56 of fixed overhead is allocated as $1.12 per direct labor dollar. What will be the real effect on profit if the order is accepted?
The profit will increasedecrease by $ . |
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