Question
Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails
Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year. The following information relates to current production: Sale price per unit $150 Variable costs per unit: Manufacturing 55 Marketing and administrative 25 Total fixed costs: Manufacturing $640,000 Marketing and administrative $280,000 If a special sales order is accepted for 2,000 sails at a price of $95 per unit, and if the order requires both variable manufacturing and variable marketing and administrative costs, and if incremental fixed costs of $10,000 are required, what will be the impact on operating income? Question 7 options: Operating income decreases $44,000. Operating income increases $20,000. Operating income decreases $34,000. Operating income increases $25,000. Save
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started