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Walnut has received a special order for 2,900 units of its product at a special price of $230. The product normally sells for $270 and
Walnut has received a special order for 2,900 units of its product at a special price of $230. The product normally sells for $270 and has the following manufacturing costs:
Per unit | |||
Direct materials | $ | 66 | |
Direct labor | 31 | ||
Variable manufacturing overhead | 47 | ||
Fixed manufacturing overhead | 117 | ||
Unit cost | $ | 261 | |
Walnut is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Walnut accepts the order, what effect will the order have on the companys short-term profit?
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