Problem 5 (10 points): Briny Sail M per year. The following information relates

Question

Problem 5 (10 points): Briny Sail M per year. The following information relates to current production: akers manufactures sails for sailboats. The company has the capacity to sails per year and is currently producing and selling 30,000 sails les price per unit ariable costs per unit: Manufacturing Selling and administrative $175 $62 $22 otal fixed costs Manufacturing $675,000 Selling and administrative $300,000 If a special pricing order is accepted for 5,500 sails at a sales price of $160 per unit, and for the order the variable or fixed selling and administrative costs are unavoidable, what is the effect on operating income?

Explanation / Answer

Current sales 30,000 Sails Special order 5,500 Sails Total Per unit Per unit Sales 175 52,50,000 160 8,80,000 61,30,000 Variable cost: (62+22) 84 25,20,000 84 4,62,000 29,82,000 Contribution Margin 91 27,30,000 76 4,18,000 31,48,000 Fixed Costs      9,75,000     9,75,000 Operating Profit 17,55,000 4,18,000 21,73,000 Increase in Operating Income 4,18,000 Effect on Operating income (increase in % of Operating income) 23.82%

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.