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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 is 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 2,500 seats at a price of $320 per unit, fixed costs increase by $5,000, and variable marketing and administrative costs for that order are $25 per unit, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A) Increase by $187,500
B) Decrease by $182,500
C) Increase by $245,000
D) Increase by $182,500
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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#2
8 years ago
Wow! Thank you
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