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bernie2981 bernie2981
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9 years ago
The following information relates to current production of outdoor chaise lounges at Backyard Posh:

Variable manufacturing costs per unit   $102.00
Total fixed manufacturing costs   $525,000
Variable marketing and administrative costs per unit   $30.00
Total fixed marketing and administrative costs   $250,000

The regular selling price per chaise lounge is $300.00. The company is analyzing the opportunity to accept a special sales order for 800 chaise lounge at a price of $250.00 per unit. Fixed costs would remain unchanged. The company has the capacity to produce 15,000 chaise lounges per year, but is currently producing and selling 10,000 chaise lounges per year. The 800 units would not require any variable marketing and administrative expenses. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected?
A) Decrease by $118,400
B) Increase by $118,400
C) Decrease by $94,400
D) Increase by $94,400
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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nucleinuclei
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9 years ago
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bernie2981 Author
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#2
8 years ago
Answers my question perfectly.
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