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Old Camp Company manufactures awnings for its own line of tents. The company currently is operating at capacity and received an offer from one of
Old Camp Company manufactures awnings for its own line of tents. The company currently is operating at capacity and received an offer from one of its suppliers to make the 10,000 awnings it needs for $18 each. Old Camps costs for making the awning are $7 in direct materials and $5 in direct labor. Variable manufacturing overhead is 80 percent of direct labor. If Old Camp accepts the offer, $32,000 of fixed manufacturing overhead currently being charged to the awnings
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