Packer Concrete Company pours concrete slabs for single-family dwellings. Wolff

Question

Packer Concrete Company pours concrete slabs for single-family dwellings. Wolff Construction Company, development of homes. Packer has the capacity to build 420 slabs and is presently working on 220 of them. Wolff is willing to pay only $2,630 per slab. Packer estimates the cost of a typical job to include unit-level materials, $950; unit-level labor, $510; and an allocated portion of facility-level overhead, $730. Required Calculate the contribution to profit from the special order. Contribution to profit

Explanation / Answer

Ans: As facility level overhead is a fixed cost so acceptance or rejection of offer willn't affect the decision.

Contribution to profit from special order = (Offer Price - Unit level materials - Unit level labor) * No of slabs

= (2630-950-510)x 53 slabs

= $ 62,010

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