Bradley Inc. has the capacity to make 100,000 windows. Bradley is currently operating at 80% capacity. The windows usually sell for $20.00 each. Costs for each window follow: Direct materials $ 5.00 Direct labor 3.00 Variable factory overhead 2.00 Fixed factory overhead 4.00 Total $14.00 The Army has offered to buy 10,000 windows for $12.00 each for barracks. Show calculation of differential analysis decision and advise Bradley Inc. of recommendation.

Bradley Inc. has the capacity to make 100,000 windows. Bradley is currently operating at 80% capacity. The windows usually sell for $20.00 each. Costs for each window follow: Direct materials $ 5.00 Direct labor 3.00 Variable factory overhead 2.00 Fixed factory overhead 4.00 Total $14.00 The Army has offered to buy 10,000 windows for $12.00 each for barracks. Show calculation of differential analysis decision and advise Bradley Inc. of recommendation.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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