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Marcotti Cupcakes bakes and sells a basic cupcake for $1.25. The cost of producing 600,000 cupcakes in the prior year was: Revenues Direct materials
Marcotti Cupcakes bakes and sells a basic cupcake for $1.25. The cost of producing 600,000 cupcakes in the prior year was: Revenues Direct materials Direct labor Manufacturing overhead (fixed) Manufacturing overhead (variable) $750,000 324,000 66,000 131,000 84,000 At the start of the current year, Marcotti received a special order for 14,000 cupcakes to be sold for $1.10 per cupcake. To complete the order, the company must incur an additional $800 in total fixed costs to lease a special machine that will stamp the cupcakes with the customer's logo. This order will not affect any of Marcott's other operations and it has excess capacity to fulfill the contract. Should the company accept the special order? profit will by
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