Question
The following information relates to current production of outdoor chaise lounges at BackyardPosh: Variable manufacturing costs per unit $ 105 $105 Total fixed manufacturing costs
The following information relates to current production of outdoor chaise lounges at BackyardPosh:
Variable manufacturing costs per unit
$ 105
$105
Total fixed manufacturing costs
$525,000
Variable marketing and administrative costs per unit
$ 30
$30
Total fixed marketing and administrative costs
$250,000
The regular selling price per chaise lounge is $ 350
$350. The company is analyzing the opportunity to accept a special sales order for 300
300 chaise lounges at a price of $ 210
$210 per unit. Variable marketing and administrative costs would be $ 15
$15 per unit lower than on regular sales. Fixed costs would increase by $ 13 comma 000
$13,000. The company has the capacity to produce 85 comma 000
85,000 chaise lounges peryear, but is currently producing and selling 10 comma 000
10,000 chaise lounges per year. Regular sales will not be affected by the special order. If the company were to accept this specialorder, how would operating income beaffected?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started