Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats per year. The following information relates to current production:

Sale price per unit$400Variable costs per unit:$220Manufacturing$50Marketing and administrativeTotal fixed costs:Manufacturing$750,000Marketing and administrative$200,000

• If a special sales order is accepted for 3,000 seats at a price of $300 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 $80,000
• B.Increase by $230,000
• C.Increase by $90,000
• D.Increase by $80,000

Pluto Incorporated provided the following information regarding its single product:

Direct materials used$240,000Direct labor incurred$420,000Variable manufacturing overhead$160,000Fixed manufacturing overhead$100,000Variable selling and administrative expenses$60,000Fixed selling and administrative expenses$20,000

• The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory. What would be the effect on operating income of accepting a special order for 3,500 units at a sale price of $55 per product?A.Increase by $115,500
• B.Increase by $269,500
• C.Decrease by $115,500
• D.Decrease by $269,500

Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats per year. The following information relates to current production:

Sale price per unit$400Variable costs per unit:$220Manufacturing$50Marketing and administrativeTotal fixed costs:Manufacturing$750,000Marketing and administrative$200,000

• If a special sales order is accepted for 7,000 seats at a price of $350 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.Increase by $560,000
• B.Decrease by $560,000
• C.Increase by $2,450,000
• D.Increase by $8,000,000

Samson Incorporated provided the following information regarding its only product:

Sale price per unit$50.00Direct materials used$160,000Direct labor incurred$185,000Variable manufacturing overhead$120,000Variable selling and administrative expenses$70,000Fixed manufacturing overhead$65,000Fixed selling and administrative expenses$12,000Units produced and sold20,000Assume no beginning inventory

• Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 1,200 units at a sale price of $47 per product? The 1,200 units would not require any variable selling and administrative expenses. (NOTE: Assume regular sales are not affected by the special order.)A.Increase by $84,300
• B.Decrease by $28,500
• C.Increase by $24,300
• D.Increase by $28,500