Question 5

HASF Furniture Inc. manufactures a moderate-price set of lawn furniture (a table and four chairs) that it sells for $500. It currently manufactures and sells 10,000 sets per year. The manufacturing costs 325 (include $185 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 300 sets per year for three years at a price of $250 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:

Revenue increase after accepting the order

Cost increase after accepting the order

At what amount of profit increaes after accepting the speical order