Chapter 10 Relevant Costing for Marveg Relevant Costing for Managerial Decisions aconnect is manufactures and sells to wholesalers approximately 400.000 packages per year of un- workers at $6 per package. Annual cos oss for the production and sale of this quantity are shown Antes Products derwater markers in the table bus per year of un- PR PROBLEM SET A Problem 10-1A Analysis of income effects of additional business $ 576,000 Direct materials Direct labor Overhead Selling expenses. Administrative expenses............ Total costs and expenses...... 144.000 320,000 150,000 100,000 $1,290,000 new wholesale under the wholesale Judy of the costs of th holesaler has offered to buy 50.000 packages for $5.20 each. These markers would be marketed wholesaler's name and would not affect Jones Products's sales through its normal channels. A the costs of this additional business reveals the following: Direct materials costs are 100% variable. Per unit direct labor costs for the additional units would be 50% higher than normal because their pro- duction would require overtime pay at 1 times the usual labor rate. Twenty-five percent of the normal annual overhead costs are fixed at any production level from 350.000 to 500.000 units. The remaining 75% of the annual overhead cost is variable with volume. Accepting the new business would involve no additional selling expenses. Accepting the new business would increase administrative expenses by a $5,000 fixed amount Required Prepare a three-column comparative income statement that shows the following: 1. Annual operating income without the special order (column 1). 2. Annual operating income received from the new business only (column 2). 3. Combined annual operating income from normal business and the new business (column 3). Check Operating income (1) $1.110,000 215126.000 unit. The comnany currently has the capacity to Problem 10-2A