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Calculate the contribution to profit from the special order

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Reference no: EM132466017

Gibson Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Gibson's normal sales territory, asks Gibson to pour 49 slabs for Lancing's new development of homes. Gibson has the capacity to build 370 slabs and is presently working on 140 of them. Lancing is willing to pay only $2,630 per slab. Gibson estimates the cost of a typical job to include unit-level materials, $820; unit-level labor, $420; and an allocated portion of facility-level overhead, $1,470.

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Question problem 1: Calculate the contribution to profit from the special order. Should Gibson accept or reject the special order to pour 49 slabs for $2,630 each?

Reference no: EM132466017

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