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Question - WallaWalla Metal Works received an offer from a big-box retail company to purchase 2,400 metal outdoor tables for $176 each. WallaWalla Metal Works accountants determine that the following costs apply to the tables:
Direct material $100
Direct labor 40
Manufacturing overhead 56
Total $196
Of the $56 of overhead, $11 is variable and $45 relates to fixed costs. The $45 of fixed overhead is allocated as $0.90 per direct labor dollar.
Required - What will be the real effect on profit if the order is accepted?
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