Question
The following information relates to current production of outdoor wicker sofas at Backyard Posh Variable manufacturing costs per unit Total fixed manufacturing costs Variable
The following information relates to current production of outdoor wicker sofas at Backyard Posh Variable manufacturing costs per unit Total fixed manufacturing costs Variable marketing and administrative costs per unit Total fixed marketing and administrative costs $104 $525,000 $34 $260,000 The regular selling price per wicker sofa is $350. The company is analyzing the opportunity to accept a special sales order for 700 wicker sofas at a price of $220 per unit. Fixed costs would by $21,000. The company has the capacity to produce 125,000 wicker sofas per year, but is currently producing and selling 11,000 wicker sofas per year. Regular sales will not be affected m special order. If the company were to accept this special order, how would operating income be affected? A Decrease by $36,400 OB. Increase by $57,400 OC. Decrease by $57,400 OD. Increase by $36,400
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