1. HASF Furniture Inc. manufactures a moderate-price set of lawn furniture (a table and four chairs) that it sells for $225. It currently manufactures and sells 6,000 sets per year. The manufacturing costs 155 (include $85 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 600 sets per year for three years at a price of $150 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.

Calculate

Amount of profit that will increaes after accepting the special order

Revenue increase after accepting the order

Cost increase after accepting the order

2. HASF & company  sells paint and paint supplies carpet and wallpaper at a single store location in suburban Baltiomore Although the company has been very profitable over the year management has seen very profitable over the year management has seen a significant decline in wallpaper sales and earnings Much of this decline is attributable to the internet and to companies that advertise deeply discounted prices in magazines and offer customer free shipping and toll free telephone number recent figures follow 

                           Paint and supplies     Carpeting     wallpaper     Total
sale                       s     250,000              230,000         70,000         550,000
less variable cost     170,000            161,000        56,000           387,000
fixed costs                      40,000          40,000          40,000           120,000
total cost                    210,000           201,000         96,000          507,000
operating income     40,000              29,000            -26,000         43,000

Other information:

Management is studying whether to drop wallpaper because of the changing market and accompanying loss if the line is dropped the following changes are expected to occur 

1.      The vacated space will be remodeled at a cost of 6,200 and will be devoted to an expanded line of high and carpet sales of carpet are expected to increase by 60,000 and the line overall contribution margin ratio will rise by 5% 

2.      Contemporaty can cut wallpapers fixed costs by 40% 

3.      Sales of paint and paint supplies are expected to fall by 20% 

4.      The firm will increase advertising expenditures by 12,500 to promote the expanded carpet line 

required
 At what amount of proift  will be decrease after the dropped

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