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Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats
Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit $440 Variable costs per unit: Manufacturing Marketing and administrative $270 $90 Total fixed costs: Manufacturing Marketing and administrative $790,000 $240,000 If a special sales order is accepted for 4,300 seats at a price of $425 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating O A. Increase by $666,500 OB. Increase by $279,500 OC. Increase by $2,988,500 OD. Decrease by $666,500 Mission Company has three product lines: D, E, and F. The following information is available: Sales revenue Variable expenses $80,000 $42,000 $38,000 $12,000 $26,000 $47,000 $23,000 $24,000 $15,000 $9,000 $ 20,000 $12,000 $ 8,000 $14,000 $(9,000) Fixed expenses Operating income (loss) Mission Company is thinking of discontinuing product line F because it is reporting an operating loss. All fixed costs are unavoidable. Mission Company discontinues product line F and rents the space formerly used to produce product F for $19,000 per year, what affect will this have on operating income? O A. Decrease $11,000 OB. Increase $37,000 OC. Increase $28,000 OD. Increase $11,000
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