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Comfort Cloud manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats
Comfort Cloud manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats per year. The following information relates to current production: Sale price per unit $400 Variable costs per unit: Manufacturing Marketing and administrative S220 $50 Total fixed costs: Manufacturing Marketing and administrative $750,000 $200,000 If a special sales order is accepted for 5,500 seats at a price of $325 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Increase by $577,500 Increase by $302,500 Decrease by $577,500 Increase by $2,997,500
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