Bradley Inc. has the capacity to make 100,000 windows. Bradley is currently operating at 100%...
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Accounting
Bradley Inc. has the capacity to make 100,000 windows. Bradley is currently operating at 100% capacity. The windows usually sell for $20.00 each. The costs for each window follow:
Direct Materials 5.00
Direct Labor 3.00
Variable factory oh 2.00
Fixed factory oh 4.00
Total $14.00
The Army has offered to buy 10,000 windows for $12.00 each for barracks. Bradley should:
1. Reject the order because the company will lose $20,000 on the order
2. Accept the offer because the company will realize $40,000 in additional contribution margin
3. Accept the offer because the company will realize $20,000 in additional contribution margin
4. Reject the offer because it currently does not have enough capacity to accept the order.
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