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If a special sales order is accepted for 5,800 umbrellas at a price of $38 per unit, fixed costs remain unchanged, and no variable marketing
If a special sales order is accepted for 5,800 umbrellas at a price of $38 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.) Shady Inc. manufactures outdoor umbrellas. The company has the capacity to produce 100,000 units per year, but it currently produces and sells 75,000 units per year. The following information relates to current production: Sales price per unit $40 Variable costs per unit: Manufacturing Marketing and administrative $22 $6 Total fixed costs: Manufacturing Marketing and administrative $80,000 $23,000 If a special sales order is accepted for 5.800 umbrellas at a price of $38 per unit. fixed costs remain A. Increase by $58,000 B. Decrease by $92,800 OC. Increase by $92,800 D. Increase by $220,400
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