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Bridge Company makes special equipment used in cell towers. Each unit sells for $410. Bridge uses just-in-time inventory procedures;it produces and sells 12,500 units per
Bridge Company makes special equipment used in cell towers. Each unit sells for $410. Bridge uses just-in-time inventory procedures;it produces and sells 12,500 units per year. It has provided the following income statement data: Traditional Format Contribution Margin Format Sales revenue $5,125,000 Sales revenue $5,125,000 Cost of goods sold 3,000,000 Variable costs: Gross profit 2,125,000 Manufacturing 1,000,000 Selling & admin. expenses 725.000 Selling & admin 500,000 Contribution margin 3,625,000 Fixed costs: Manufacturing 2,000,000 Selling & admin 225.000 Operating income $1.400.000 Operating income $1.400.000 A foreign company has offered to buy 100 units for a reduced sales price of $200 per unit. The marketing manager says the sale will have no negative impact the company's regular sales. The sales manager says that this sale will not require any additional selling and administrative costs, as it is a one-time deal. The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs. If Bridge accepts the deal, how will this impact operating income? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar) Select one: A Operating income will increase by $20,000 B. Operating income will increase by $12.000 C Operating income will decrease by $12.000, D. Operating income will increase by $22.000, E. None of the above
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