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Calculate the cost increase after accepting the order

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Question - HASF Furniture Inc. manufactures a moderate-price set of lawn furniture (a table and four chairs) that it sells for $225. It currently manufactures and sells 6,000 sets per year. The manufacturing costs 155 (include $85 for materials and $45 for labor per set). The overhead entirely of fixed costs. Modern furniture's is considering a special purchase offer from a large retail firm, which has offered to buy 600 sets per year for three years at a price of $150 per set. Modern furniture has the available plant capacity to produce the order and expects no other orders or profitable alternative uses of the plant capacity.

Required -

1. Calculate the amount of profit that will increase after accepting the special order?

2. Calculate the revenue increase after accepting the order?

3. Calculate the cost increase after accepting the order?

Reference no: EM132934271

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