Piersall Company makes a variety of paper products. One product is 20 lb copier
ID: 2372592 • Letter: P
Question
Piersall Company makes a variety of paper products. One product is 20 lb copier paper, packaged 5,000 sheets to a box. One box normally sells for $18. A large bank offered to purchase 3,000 boxes at $14 per box. Costs per box are as follows:
Direct materials
$8
Direct labor
3
Variable overhead
1
Fixed overhead
5
No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity, but they are above breakeven. No fixed costs are avoidable.
Should Piersall accept the order?
Direct materials
$8
Direct labor
3
Variable overhead
1
Fixed overhead
5
Explanation / Answer
it should be C.