Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gardner Sail Makers manufactures sails for sailboats. The company has the capacity to produce 36,000 sails per year and is currently producing and selling 30,000

Gardner Sail Makers manufactures sails for sailboats. The company has the capacity to produce 36,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production.

Sales price per unit $180

Variable costs per unit:
Manufacturing.        $62
Selling & Admin.      $22

Total fixed costs:
Manufacturing.        $700,000
Selling & Admin.       $250,000

Assume that a special pricing order is accepted for 5,600 sails at a sales price of $140 per unit. This special order requires both variable manufacturing and variable selling and administrative costs, as well as incremental fixed costs of $401,000. What will be the impact on operating income?


Step by Step Solution

There are 3 Steps involved in it

Step: 1

To determine the impact on operating income we need to calculate the additional revenue generated fr... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Cost Accounting

Authors: William Lanen, Shannon Anderson, Michael Maher

4th edition

78025524, 978-0078025525

More Books

Students also viewed these Accounting questions

Question

Write a program to check an input year is leap or not.

Answered: 1 week ago

Question

Write short notes on departmentation.

Answered: 1 week ago

Question

What are the factors affecting organisation structure?

Answered: 1 week ago

Question

What are the features of Management?

Answered: 1 week ago

Question

Briefly explain the advantages of 'Management by Objectives'

Answered: 1 week ago