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The following information relates to current production of outdoor wicker sofas at Backyard Posh: Variable manufacturing costs per unit $107 Total fixed manufacturing costs $525,000
The following information relates to current production of outdoor wicker sofas at Backyard Posh: Variable manufacturing costs per unit $107 Total fixed 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 500 wicker sofas at a price of $240 per unit. Variable marketing and administrative costs would be $13 per unit lower than on regular sales. Fixed costs would increase $15,000. The company has the capacity to produce 15,000 wicker sofas per year, but is currently producing and selling 10,000 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 $41,500 O B. Decrease by $56,500 O C. Increase by $41,500 OD. Increase by $56,500
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