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Rainbow Sailmakers makes sails for sailboats. The company has the capacity to produce 25,000 sails per year but is currently producing and selling 20,000 sails
Rainbow Sailmakers makes 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. Both 25,000 sails and 20,000 sails are within the relevant range. The following information relates to current production. Sales price per unit: $150 Variable manufacturing costs per unit: $55 Variable selling & administrative costs per unit: $25 Fixed manufacturing costs (for the year): $640,000 Fixed selling & administrative costs (for the year): $280,000 If a special order is accepted for 3,000 sails at a price of $135 per unit and fixed costs remain unchanged, net income would increase by $225,000 increase by $205,000 increase by $185,000 increase by $165,000
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