Determine if the order should be accepted or rejected? O'Malley, Inc. has a capacity of producing 300,000
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Determine if the order should be accepted or rejected?
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O'Malley, Inc. has a capacity of producing 300,000 units a year and sells them at $28 a unit. At present O'Malley is selling 250,000 units. A foreign distributor has offered to purchase 40,000 units at $20 a unit. The customer will pay all freight costs and no commissions will be paid on this prder, so variable selling costs will be reduced by 40%. The sales manager has collected the following data on O'Malley's operating costs: Per Unit $ 3.00 7.50 Direct Materials Direct labor Variable overhead Variable selling Fixed overhead Fixed administration Total 6.00 3.50 4.00 1.50 $ 25.50 O'Malley, Inc. has a capacity of producing 300,000 units a year and sells them at $28 a unit. At present O'Malley is selling 250,000 units. A foreign distributor has offered to purchase 40,000 units at $20 a unit. The customer will pay all freight costs and no commissions will be paid on this prder, so variable selling costs will be reduced by 40%. The sales manager has collected the following data on O'Malley's operating costs: Per Unit $ 3.00 7.50 Direct Materials Direct labor Variable overhead Variable selling Fixed overhead Fixed administration Total 6.00 3.50 4.00 1.50 $ 25.50
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