Question
Ole Kirk Christiansen is a carpenter. Ole makes custom coffee tables. A customer has requested two duplicate tables: one for the primary home and one
Ole Kirk Christiansen is a carpenter. Ole makes custom coffee tables. A customer has requested two duplicate tables: one for the primary home and one for a vacation home. The customer has offered $800 for both tables instead of $1,000 ($500 each) that Ole normally charges. The costs for one table is shown below. One Table Direct Materials $100 Direct Labor $200 Variable Overhead $50 Fixed Overhead $20 If Ole accepted this order, what would be the total cost for both tables? How much profit will Ole generate for this special order? If Ole always required a 10% profit on all orders, should Ole accept this order? Why or why not?
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