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bernie2981 bernie2981
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8 years ago
Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats:

Sale price per unit   $400
   
Variable costs per unit:   
 Manufacturing   $220
 Marketing and administrative   $50
   
Total fixed costs:   
 Manufacturing   $750,000
 Marketing and administrative   $200,000

If a special sales order is accepted for 4,000 seats at a price of $325 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A) Increase by $420,000
B) Increase by $220,000
C) Increase by $2,180,000
D) Decrease by $420,000
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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nucleinuclei
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8 years ago
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bernie2981 Author
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8 years ago
Smart ... Thanks!
SUmmerPeople
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Yesterday
This site is awesome
Jadakiss
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2 hours ago
Good timing, thanks!
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