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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

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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 $315. The company currently manufactures and sells 7,800 sets per year. The manufacturing costs include $103 for direct materials and $63 for direct labor per set. The overhead charge per set is $53, which consists entirely of fixed costs. HighValu is considering a special purchase offer from a large retail firm, which has offered to buy 780 sets per year for three years at a price of $222 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? Required information Self-Study Problem 11-2 (Algo) The Make-vs.-Buy Decision [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 $275. The company currently manufactures and sells 7,000 sets per year. The manufacturing costs include $95 for direct materials and $55 for direct labor per set. The overhead charge per set is $45, which consists entirely of fixed costs. Assume that HighValu currently purchases the chair cushions for its lawn set from an outside vendor for $20 per set. HighValu's chief operations officer wants an analysis of the comparative costs of manufacturing these cushions to determine whether bringing the manufacturing in-house would save the company money. Additional information shows that if HighValu were to manufacture the cushions, the direct materials cost would be $8 and the direct labor cost would be $6 per set. In addition, to produce the cushions, HighValu would have to purchase cutting and sewing equipment, which would add $20,000 to annual fixed costs. Part 1 (Algo) Required: 1. What is the total relevant cost per year to purchase the chair cushions from the outside supplier? 2. What is the total relevant cost per year to produce the chair cushions internally? 3. What is the estimated net annual effect on operating income of producing the cushions internally rather than purchasing the cushions from an external supplier

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