problem associated with cost allocation : Custom metal works received an offer from a big retail company to purchase 3,000 metal outdoor tables for $220 each. Custom Metal Works accountants determine that the following costs apply to the tables

direct material $125

direct labor 50

manufacturing overhead 70

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total $245

of the $70 of overhead, $14 is variable and $56 relates to fixed costs. The $56 of fixed overhead is allocated as $1.12 per direct labor dollar:

required

#a what will be the real effect on profit if the order is accepted?

#b explain why managers who focus on reported cost per unit may be included to turn down the order