Standard costs when producing a tire

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Reference no: EM13754197

ZZ Tire Company has the following standard costs when producing a tire:

Direct Materials: $17 per tire.

Direct Labor: $15 per tire.

Variable Overhead: $10 per tire.

Retail Price per tire: $50 per tire.

They have gotten a special order for 30,000 custom tires that increase direct materials by $5 per tire and direct labor by $8 per tire. If they sell at the same price, should they accept this order? Analyze this by figuring out the total relevant cost and compare this to the retail price.

Reference no: EM13754197

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