12) Centric Sail Makers manufactures sails for sailboats. The company has the capacity to produce 36,000 sails per year and is currently producing and selling 30,000 sails per year. The following informat relates to current production: ales price per unit Variable costs per unit: Manufacturing Selling and administrative otal fixed costs: Manufacturing $675,00 Selling and administrative $300 If a special pricing order is accepted for 5,600 sails at a sales price of $150 per unit, and fixed costs remain unchanged, what is the change in operating income? (Assume the special pricing order will require variable manufacturing costs and variable selling and administrative costs.) A) Operating income decreases by $840,000 B) Operating income increases by $840,000. C) Operating income decreases by $392,000. D) Operating income increases by $392,000. 13) Paragon Products sells a special type of navigation equipment for $1,300. Variable costs are $800 per unit. When a special order arrived from a foreign contractor to buy 42 units at a reduced sales price of $900 per unit, there was a discussion among the managers. The controller said that as long as the special price was greater than the variable costs, the sale would contribute to the company's profits and should be accepted as offered. The vice president, however, decided to decline the order. Which of the following statements supports the decision of the vice president? A) The order is not likely to affect the regular sales. B) The company is operating at 70% of its production capacity. C) The variable costs of $800 includes variable costs of packing the product D) The company will need to hire additional staff to execute this order 14) In deciding whether to drop its electronics product line, a company's manager should ignore A) the variable and fixed costs it could save by dropping the product line B) the revenues it would lose from dropping the product line C) the effect of dropping the electronics product line on the sales of its other products D) the amount of unavoidable fixed costs