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Golden Metal Works received an offer from a big-box retail company to purchase 3,000 metal outdoor tables for $240 each. Golden Metal Works accountants determine that the following costs apply to the tables:
Direct material$130Direct labor 60Manufacturing overhead 91Total$281
Of the $91 of overhead, $13 is variable and $78 relates to fixed costs. The $78 of fixed overhead is allocated as $1.30 per direct labor dollar.
Problem 1: What will be the real effect on profit if the order is accepted?
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