B & B makes a single product which sells for $20 and for which there is a great demand. The variable cost comprises: $ Direct material 4 Direct labour (2 hours) 6 Variable overhead 2 Total variable cost 12 The workers are currently operating at full capacity and no extra hours is available. A customer approached B & B with a request for the manufacture of a special order for which he is willing to pay $5500. The costs of the special order would be $2000 for direct materials, and 5000 labour hours will be required. Advise B & B whether the order should be accepted.

B & B makes a single product which sells for $20 and for which there is a great demand. The variable cost comprises: $ Direct material 4 Direct labour (2 hours) 6 Variable overhead 2 Total variable cost 12 The workers are currently operating at full capacity and no extra hours is available. A customer approached B & B with a request for the manufacture of a special order for which he is willing to pay $5500. The costs of the special order would be $2000 for direct materials, and 5000 labour hours will be required. Advise B & B whether the order should be accepted.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EA: Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in...

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