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Likea has a capacity of 30,000 end tables per year and is currently selling all 30,000 for $240 each. Sleep EZ has approached Likea and offered to purchase 800 end tables for $210 each. Direct Materials are $115 per table and direct Labor is $50 per table. Likea can produce the tables on an overtime shift. They will have to pay 150% of direct labor costs. Annual fixed costs will be unaffected and the special order will not affect any other operations. What is the incremental profit or loss? Should Likea accept the order? Identify at least one qualitative issue Likea should consider.

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Category:- Accounting Basics
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