Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Clear Sky Sailmakers manufactures sails for sailboats. The company has the capacity to produce15,000 sails peryear, but is currently producing and selling10,000 sails per year.
Clear Sky Sailmakers manufactures sails for sailboats. The company has the capacity to produce15,000 sails peryear, but is currently producing and selling10,000 sails per year. The following information relates to currentproduction:
Sale price per unit | $250 |
Variable costs perunit: | |
Manufacturing | $165 |
Marketing and administrative | $50 |
Total fixedcosts: | |
Manufacturing | $750,000 |
Marketing and administrative | $200,000 |
If Clear Sky Sailmakers accepts a special order for5,000 sails at a price of$225 perunit, and fixed costs remainunchanged, how would operating income beaffected? (NOTE: Assume regular sales are not affected by the specialorder.)
A. Increase by$150,000B. Increase by$50,000C. Decrease by$50,000D. Increase by$1,125,000Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started