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WD Inc, is developing a regression cost equation for the indirect costs in its plant. WD manufactures windows and doors used in home construction; both
WD Inc, is developing a regression cost equation for the indirect costs in its plant. WD manufactures windows and doors used in home construction; both products are made in standard and custom sizes. Oceasionally, a very large order substantially increases the direct and indirect costs in a givea month. The indirect costs primarily consist of supplies, quality control and testing. overtime, and other indirect labor. Regression is used to budget indirect costs for the coming year, primarily for eagh management puzposes. The managensent accoantant, knows from prior years that boeh direct labor hoars and machine hours in the plant Question: WD has received a custom onder that would cause Direct Labor hours to be 45,000 hours and Machiac bours to be 4200 hours next month. They have trodgeted a maximum cash flow of $400,000 for the month. Showld they aceept the custom order? Explain your
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