**************** Venus Corporation provided the following information regarding its single product: Direct materials used Direct labor incurred Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 240,000 $ 420,000 $ 160,000 $ 100,000 $ 60,000 $ 20.000 The regular selling price for the product is $75. The annual quantity of units produced and sold is 25,000 units (the costs above relate to the 25,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory. What would be the effect on operating income of accepting a special order for 2,000 units at a sale price of $40 per product? The special order units would not require any variable selling and administrative expenses. A. Decrease by $11,500 B. Decrease by $12,000 C. Increase by $14,400 D. Increase by $16,000 ****************** Green Valley golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $18,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $8 per golfer. The Green Valley golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should Green Valley charge for a round of golf? Answer: ****************** Pottery Unlimited has two product lines: cups and pitchers. Income statement data for the most recent year follow: Sales revenue Variable expenses Contribution margin Fixed expenses Operating income (loss) Total $460.000 375,000 85.000 76,000 $9,000 Cups $310.000 235,000 75,000 38.000 $37.000 Pitchers $150.000 140,000 10,000 38,000 $(28.000) Assuming the Pitcher line is dropped, total fixed costs remain unchanged, and the space formerly used to produce the Pitcher line is used to double the production of Cups, how will operating income be affected