Norman Concrete Co. pours concrete slabs for single-family dwellings. Wayne Cons

Question

Norman Concrete Co. pours concrete slabs for single-family dwellings. Wayne Construction Co, which operates outside Norman normal sales territory, asks Norman to pour 40 slabs for Tudor's new development of homes. Norman has the capacity to build 300 slabs and is presently working on 250 of them. Wayne is willing to pay only $2,250 per slab. Norman estimates the cost of a typical job to include unit-level labor, $1,000; and an allocated portion of facility-level overhead, $700.

Should Norman accept or reject the special order to pour 40 slabs for $2,250 each? Support your answer with appropriate computations.

Explanation / Answer

for norman cost per unit of slab = 1000 + 700 = 1700 and wayne is willing to pay more than 1700 i.e, 2250, since there is a benefit, so norman should accept the offer

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