Question

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 40 slabs for Wolff’s new development of homes. Packer has the capacity to build 300 slabs and is presently working on 250 of them. Wolff is willing to pay only $2,750 per slab. Packer estimates the cost of a typical job to include unit-level materials, $1,200; unit-level labor, $600; and an allocated portion of facility-level overhead, $1,000.

Required
Should Packer accept or reject the special order to pour 40 slabs for $2,750 each? Support your answer with appropriate computations.



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  • CreatedFebruary 07, 2014
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