Reference no: EM132974492

Problem 1: A condominium developer has offered HCI a contract to supply cabinets for all of the units in a new condominium project. HCI has capacity in the factory to fill the order without impacting production of other cabinets. Luke is in favour of accepting the contract and Michelle is opposed. The details of the offer are as follows: Direct labour hours 2.6 per unit Direct labour rate $38.50 per hour Direct materials $128 per unit Variable overhead $38 per unit Fixed overhead (allocated based on direct labour hours) $42 per unit Delivery (per cabinet) $10 per unit Installation labour hours 0.7 per unit Installation labour rate $35 per hour Selling price $340 per unit Darren would like your independent assessment of whether accepting the contract is in the best interests of HCI as a whole. He also wants to understand why Luke is in favour of accepting the contract while Michelle is opposed, and if there is anything he can do to avoid these types of conflicts in the future and ensure that decisions are consistent with HCI's best interests as a whole