Question
Embers, Inc. manufactures barbecue grills. Here are data regarding its current year operations: Selling price $340 per unit Variable manufacturing costs $104 per unit Variable
Embers, Inc. manufactures barbecue grills. Here are data regarding its current year operations:
Selling price
$340 per unit
Variable manufacturing costs
$104 per unit
Variable selling and administrative costs
$31 per unit
Fixed manufacturing costs
$525,000 total
Fixed administrative costs
$270,000 total
The company is analyzing the opportunity to accept a special sales order for 300 grills at a selling price of
$220 per unit. The company has the capacity to produce 35,000 grills per year but is currently producing
and selling 31,000 grills per year. Regular sales will not be affected by the special order. If Embers accepts the special order, how would this impact Embers' operating income?
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