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 45 slabs for Wolff’s new development of homes. Packer has the capacity to build 440 slabs and is presently working on 110 of them. Wolff is willing to pay only $2,680 per slab. Packer estimates the cost of a typical job to include unit-level materials, $850; unit-level labor, $460; and an allocated portion of facility-level overhead, $740.

Required

Calculate the contribution to profit from the special order.

Should Packer accept or reject the special order to pour 45 slabs for $2,680 each?

• Accept

• Reject

Answer 1

The correct answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.