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Comfort Cloud manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per
Comfort Cloud manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production: Sales price per unit $410 Variable costs per unit: Manufacturing Marketing and administrative $250 $80 Total fixed costs: Manufacturing Marketing and administrative $760,000 $230,000 If a special sales order is accepted for 2,500 seats at a price of $320 per unit, fixed costs increase by $6,800, and variable marketing and administrative costs for that order are $5 per unit, how would operating income O A. Increase by $168,200 OB. Decrease by $155,700 O C. Increase by $162,500 OD. Increase by $155,700 Westfall Watches has two product lines: Luxury watches and Sporty watches. Income statement data for the most recent year follow: Total Luxury Sporty Sales revenue $520,000 $390,000 $130,000 Variable expenses 355,000 235,000 120,000 Contribution margin 165,000 155,000 10,000 Fixed expenses 76,000 38,000 38,000 Operating income (loss) $89,000 $117,000 $(28,000) If $22,000 of fixed costs will be eliminated by discontinuing the Sporty line, how will operating income be affected? O A. Increase $190,000 O B. Increase $57,000 O c. Decrease $32,000 OD. Increase $12,000
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