Incremental revenue | 136240 | =52*2620 |
Less: Incremental costs | ||
Materials | 48880 | =52*940 |
Labor | 28600 | =52*550 |
Total Incremental costs | 77480 | |
Contribution to profit | 58760 |
Accept the special order, as contribution to profit is positive |
Exercise 6-6A Special order decision LO 6-2 Thornton Concrete Company pours concrete slabs for single-family dwellings....
Stuart Concrete Company pours concrete slabs for single-family
dwellings. Lancing Construction Company, which operates outside
Stuart’s normal sales territory, asks Stuart to pour 46 slabs for
Lancing’s new development of homes. Stuart has the capacity to
build 480 slabs and is presently working on 160 of them. Lancing is
willing to pay only $2,640 per slab. Stuart estimates the cost of a
typical job to include unit-level materials, $960; unit-level
labor, $440; and an allocated portion of facility-level overhead,
$1,300....
Gibson Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Gibson’s normal sales territory, asks Gibson to pour 46 slabs for Lancing’s new development of homes. Gibson has the capacity to build 370 slabs and is presently working on 140 of them. Lancing is willing to pay only $2,670 per slab. Gibson estimates the cost of a typical job to include unit-level materials, $910; unit-level labor, $450; and an allocated portion of facility-level overhead, $1,400....
Packer Concrete Company pours concrete slabs for single-family dwellings. Wolff Construction Company, which operates outside Packer's normal sales territory, asks Packer to pour 47 slabs for Wolff's new development of homes. Packer has the capacity to build 450 slabs and is presently working on 140 of them. Wolff is willing to pay only $2,630 per slab. Packer estimates the cost of a typical job to include unit-level materials, $820; unit-level labor, $570; and an allocated portion of facility-level overhead, $720....