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Question - Marx Metal Works received an offer from a big-box retail company to purchase 2,760 metal outdoor tables for $200 each. Marx Metal Works accountants determine that the following costs apply to the tables:
Direct material $118
Direct labor 46
Manufacturing overhead 65
Total $229
Of the $65 of overhead, $13 is variable and $52 relates to fixed costs. The $52 of fixed overhead is allocated as $1.02 per direct labor dollar.
What will be the real effect on profit if the order is accepted?
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