Question 1 :

Pisces Company manufactures sonars for fishing boats. Model 100 sells for $200. Pisces produces and sells 6,000 units per year. Cost data are as follows: Variable manufacturing $100 per unit Variable selling and administrative $6 per unit Fixed manufacturing $280,000 per year Fixed selling and administrative $140,000 per year An offer has come in for a one - time sale of 300 units at a special price of $130 per unit. The marketing manager says that the sale will not affect the company's regular sales activities, and that it will not require any variable selling and administrative costs. The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way. What is the effect of this deal on operating income? O A. Operating income increases by $9,000. O B. Operating income increases by $1,800. O C. Operating income increases by $200. O D. Operating income decreases by $9,000.Acompany produces Elli] microwave ovens per month, each of Iwhich includes one electrical circuit. The company currently manufactures the circuit in house but is considering outsourcing the circuits at a contract cost of $23 each. Currently, the cost of producing circuits in house includes variable costs of $24 per circuit and xed costs of $5,000 per month. Assume the company could not reduce any xed costs by outsourcing and that there is no alternative use for the facilities presently being used to make circuits. If the company outsources. operating income 1.Irill: O A. stay the same 0 E. increase by $5.500 O C. decrease by $800 0 D. decrease by $4,300