Question: Engines can be assembled on overtime in the engine assembly department. Suppose production efficiencies do not change and 2,000 machine-hours of engine assembly overtime capacity

Engines can be assembled on overtime in the engine assembly department. Suppose production efficiencies do not change and 2,000 machine-hours of engine assembly overtime capacity are available. Direct labor costs are higher by 50% for overtime production. While variable overhead would remain the same, monthly fixed overhead in the engine assembly department would increase by $0.75 million. Should Merton assemble engines on overtime?

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