Question
i need the solution with step plz Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but
i need the solution with step plz
Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,000 sails per year. The following information relates to current production:
Sale price per unit | $150 |
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Variable costs per unit: |
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Manufacturing | $55 |
Marketing and administrative | $25 |
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Total fixed costs: |
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Manufacturing | $640,000 |
Marketing and administrative | $280,000 |
1. If a special sales order is accepted for 5,000 sails at a price of $125 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A. Decrease by $5,000
B. Increase by $190,000
C. Decrease by $125,000
D. Increase by $225,000
2. If a special sales order is accepted for 2,000 sails at a price of $95 per unit, and fixed costs increase by $10,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A. Decrease by $34,000
B. Decrease by $44,000
C. Increase by $20,000
D. Increase by $25,000
3. If a special sales order is accepted for 2,500 sails at a price of $70 per unit, fixed costs increase by $10,000, and variable marketing and administrative costs for that order are $5 per unit lower than on regular sales, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A. Decrease by $22,500
B. Decrease by $82,500
C. Increase by $10,000
D. Increase by $22,500
4. If a special sales order is accepted for 3,000 sails at a price of $75 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.)
A. Decrease by $5,000
B. Decrease by $15,000
C. Increase by $35,000
D. Increase by $60,000
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