Company a makes carpets a customer wants to place a special

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Company A makes carpets. A customer wants to place a special order for 1,000 carpets in navy blue with the company logo woven in the middle, to be priced at $30 each. Normally, Company A would charge $60 per carpet for this type of order. Stein figures that yarn and backing will cost $12 per carpet, variable overhead (machining, electricity) is $5 per carpet, direct labor is $10 per carpet, and one setup will be required at $800 per setup. The set-up charge costs are 100% labor. Currently, the workers needed to set up for and make the carpets are working at Company A. Their wages will be paid whether or not the special order is accepted. Policy is to avoid layoffs to the extent possible.Which costs of the special order relate to flexible resources?

Reference no: EM13595966

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