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Golden Metal Works received an offer from a big-box retail company to purchase 3,100 metal outdoor tables for $200 each. Golden Metal Works accountants determine
Golden Metal Works received an offer from a big-box retail company to purchase 3,100 metal outdoor tables for $200 each. Golden Metal Works accountants determine that the following costs apply to the tables:
Direct material $120Direct
labor 60
Manufacturing overhead 81
Total $261
Of the $81 of overhead, $15 is variable and $66 relates to fixed costs. The $66 of fixed overhead is allocated as $1.10 per direct labor dollar. What will be the real effect on profit if the order is accepted?
The profit will Increase or decrease? and by how much?
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