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Relevant Cost Analysis 14 Marks Part A - Special Order Hope Company produces office supplies. The cost of producing and selling one unit of its
Relevant Cost Analysis 14 Marks Part A - Special Order Hope Company produces office supplies. The cost of producing and selling one unit of its most popular item (a singing stapler) is as follows: Direct Materials Direct Labour Variable Manufacturing Overhead Foxed Manufacturing Overhead Variable Selling & Administrative Expense Foxed Selling & Administrative Expense $2.60 $0.80 $0.50 $3.20 $0.60 $6.10 An order has been received from Medicine Hat College for 200 staplers, as they feel office Singalongs would increase student and staff productivity. Due to budget cuts the college can only afford to pay $4.00/stapler, but has offered to reimburse Hope Company for 15% of its labour costs on the order. The variable selling and administrative expense would be 75% less per unit on this order than on normal sales. The singing stapler normally sells for $12.50 per Required There is ample capacity to the order placed by Medicine Hat College. If Hope Company were to accept the special order by how much would the order increase (or decrease the company's net operating income for the month
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