This Question: 1 pt 4 of 14 (3 comptete) This Quiz: 14 pts possibl The following

Question

This Question: 1 pt 4 of 14 (3 comptete) This Quiz: 14 pts possibl The following information relates to current production of outdoor chaise lounges Backyard Posh Variable manufacturing costs per unit Total foxed manufacturing costs Variable marketing and administrative costs ffer unit Total foxed marketing and administrative costs The regular $20 $102.00 525,000 S30.00 $250,000 selling price per chaise lounge is $300 00. The company is analyzing the opportunity to accept a special sales order for 200 chaise lounges at a price of company has the capacity to produce 15,000 chaise lounges per year, but is currently producing and 0.00 per unit. Flxed costs would increase by $20,000 The selling 10,000 chaise lounges per year. Regular sales will not be aflected by the special income be affected? order It the company were to accept this special order, how would operating O A. Decrease by $6,400 O B. Increase by $13,600 O C. Decreaso by $13,600 O D. Increase by $6,400 Click to select your answer alternatives 1036 PM

Explanation / Answer

Answer is A. Decrease in $6400 Explanation: Incremental Income: Incremental revenue (200 units @200) 40000 Less: Incremental cost Variable manufacturing cost (200 units*102) -20400 Variable Marketing andd Admin (200 units *30) -6000 Fixed cost -20000 Net decrease in income -6400

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