! Required Information Self-Study Problem 11-1 (Algo) Special-Order Pricing [The following information applies to the questions displayed below.] Highvalu Incorporated manufactures a moderately priced set of lawn furniture (a table and four chairs) that it sells for $250. The company currently manufactures and sells 6,500 sets per year. The manufacturing costs include $90 for direct materials and $50 for direct labor per set. The overhead charge per set is $40, which consists entirely of fixed costs. Highvalu is considering a special purchase offer from a large retail firm, which has offered to buy 650 sets per year for three years at a price of $170 per set. Highvalu has the available plant capacity to produce the order and expects no other orders or profitable alternative uses of the plant capacity. Part 1 (Algo) Required: 1. What is the total relevant cost per unit to produce the units requested by the retail firm? 2. What is the estimated net effect on annual operating income if Highvalu accepts the special sales order? 1. Total relevant cost per unit 2. Annual operating income

! Required Information Self-Study Problem 11-1 (Algo) Special-Order Pricing [The following information applies to the questions displayed below.] Highvalu Incorporated manufactures a moderately priced set of lawn furniture (a table and four chairs) that it sells for $250. The company currently manufactures and sells 6,500 sets per year. The manufacturing costs include $90 for direct materials and $50 for direct labor per set. The overhead charge per set is $40, which consists entirely of fixed costs. Highvalu is considering a special purchase offer from a large retail firm, which has offered to buy 650 sets per year for three years at a price of $170 per set. Highvalu has the available plant capacity to produce the order and expects no other orders or profitable alternative uses of the plant capacity. Part 1 (Algo) Required: 1. What is the total relevant cost per unit to produce the units requested by the retail firm? 2. What is the estimated net effect on annual operating income if Highvalu accepts the special sales order? 1. Total relevant cost per unit 2. Annual operating income

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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