Special order decision
Norman Concrete Company pours concrete slabs for single-family dwellings. Wayne Construction Company, which operates outside Norman’s normal sales territory, asks Norman to pour 40 slabs for Wayne’s new development of homes. Norman has the capacity to build 300 slabs and is presently working on 250 of them. Wayne is willing to pay only $2,500 per slab. Norman estimates the cost of a typical job to include unit-level materials, $1,000; unit-level labor, $600; and an allocated portion of facility-level overhead, $700.
Required
Should Norman accept or reject the special order to pour 40 slabs for $2,500 each? Support your answer with appropriate computations.
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