CORRECT ANSWER A. GREEN SHOULD ACCEPT THE OFFER OF $280,000 AS...
242.
Correct answer a. Green should accept the offer of $280,000 as it will cover all incremental
costs and increase operating profit.
Selling price
$280,000
Direct material
66,000
Direct labor
120,000
Variable overhead
48,000
(.4 x $120,000)
Administrative costs
12,000
(.1 x $120,000)
Contribution
$ 34,000