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Question - Granger Metal Works received an offer from a big-box retail company to purchase 3,480 metal outdoor tables for $248 each. Granger Metal Works accountants determine that the following costs apply to the tables:
Direct material $154
Direct labor 58
Manufacturing overhead 81
Total $293
Of the $81 of overhead, $16 is variable and $65 relates to fixed costs. The $65 of fixed overhead is allocated as $1.26 per direct labor dollar.
Required - What will be the real effect on profit if the order is accepted?
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