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Question - Richetti Metal Works received an offer from a big-box retail company to purchase 2,700 metal outdoor tables for $196 each. Richetti Metal Works accountants determine that the following costs apply to the tables:
Direct material $115
Direct labor 45
Manufacturing overhead 64
Total $224
Of the $64 of overhead, $13 is variable and $51 relates to fixed costs. The $51 of fixed overhead is allocated as $1.00 per direct labor dollar.
Required - What will be the real effect on profit if the order is accepted?
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