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Kennel Metal Works received an offer from a big-box retail company to purchase 3,240 metal outdoor tables for $232 each. Kennel Metal Works accountants determine that the following costs apply to the tables:
Direct material $142Direct labor 54Manufacturing overhead 76Total $272
Of the $76 of overhead, $15 is variable and $61 relates to fixed costs. The $61 of fixed overhead is allocated as $1.18 per direct labor dollar.
Problem 1: What will be the real effect on profit if the order is accepted?
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