Question
Green Leather Corporation manufactures leather seats and sells each seat for $300. The cost to manufacture 37,000 seats is as follows: Direct Materials: $3,750,000 Direct
Green Leather Corporation manufactures leather seats and sells each seat for $300. The cost to manufacture 37,000 seats is as follows: Direct Materials: $3,750,000 Direct Labour: $1,480,000 Variable Overhead: $2,000,000 Fixed Costs: $ 750,000 The company paid $100,000 to upgrade their production equipment last year. The company is not operating at full capacity and has been approached by a customer who would like to purchase a special order of 8,000 seats for $200 each. Required (8 marks) a) Prepare an incremental analysis for this situation b) Should the company accept the special order, why or why not?
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