Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following information relates to current production of outdoor wicker sofas at Backyard Posh: Variable manufacturing costs per unit $105 Total xed manufacturing costs $525,000
The following information relates to current production of outdoor wicker sofas at Backyard Posh: Variable manufacturing costs per unit $105 Total xed manufacturing costs $525,000 Variable marketing and administrative costs per unit $33 Total fixed marketing and administrative costs $250,000 The regular selling price per wicker sofa is $300. The company is analyzing the opportunity to accept a special sales order for 200 wicker sofas at a price of $230 per unit. Variable marketing and administrative costs would be $13 per unit lower than on regular sales. Fixed costs would increase by $15.000, The company has the capacity to produce 55,000 wicker sofas per year, but is currently producing and selling 13,000 wicker sofas per year. Regular sales will not be affected by the special order. If the company were to accept this special order. how would operating income be affected? O A. Decrease by $6,000 0 B. Increase by $21,000 O C. Decrease by $21.00!) 0 D. Increase by $6,000
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