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The following information relates to a product produced by Henry Company: - Academic Heroes

The following information relates to a product produced by Henry Company:

(TCO 3) The controller of Joy Co has requested a quick estimate of the manufacturing supplies needed
February 12, 2020
Jackson Company manufactures 20,000 components per year.
February 12, 2020

The following information relates to a product produced by Henry Company: Direct

materials

$13

Direct labor

10

Variable overhead

8

Fixed overhead

11

Unit cost

$42

Fixed selling costs are $1,000,000 per year. Variable selling costs of $3 per unit sold are added to cover the transportation cost. Although production capacity is 500,000 units per year, Henry expects to produce only 400,000 units next year. The product normally sells for $50 each. A customer has offered to buy 50,000 units for $38 each. The customer will pay the transportation charge on the units purchased. If Henry accepts the special order, the effect on income would be a:

$750,000 increase.

$350,000 increase.

$200,000 increase.

$100,000 increase.

 
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