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Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently produces and sells 75,000

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

Sale price per unit

$420

Variable costs per unit:

Manufacturing

$220

Marketing and administrative

$50

Total fixed costs:

Manufacturing

$770,000

Marketing and administrative

$230,000

If a special sales order is accepted for 3,100 seats at a price of $310 per unit, and fixed costs increase by $14,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

A.

Increase $265,000

B.

Increase by $110,000

C.

Decrease by $110,000

D.

Increase by $124,000

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