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Find what will be real effect on profit if order is accepted

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Reference no: EM132959433

Covington Metal Works received an offer from a big-box retail company to purchase 3,840 metal outdoor tables for $272 each. Covington Metal Works accountants determine that the following costs apply to the tables:

Direct material $172
Direct labor 64
Manufacturing overhead 90
Total $326

Of the $90 of overhead, $18 is variable and $72 relates to fixed costs. The $72 of fixed overhead is allocated as $1.38 per direct labor dollar.

Problem (a) What will be the real effect on profit if the order is accepted?

Reference no: EM132959433

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