The answer is Increase by $80,400. How do you solve it? The following informatio

Question

The answer is Increase by $80,400. How do you solve it?

The following information relates to current production of outdoor chaise lounges st Backyerd Posh: $105 $545,000 Vanahle manutacturing coets per unit Total fxed manufacturing costs Vanable marketing and administrative costs per nit Total fixed marketing and administrative costs $270,000 The regular sll pce per chaise u i 340. The compay is analyang the exporlurnily lo accepl a special sales orrhaise lounges al a price o $205 per uril. Fixed wsts would reain unchanged. Thempmy hs the capacily to produce 145.000 chaise lounges per year, but is currenty producing and selling 8,000 chaise lounges per year. Reglar sales will not be affected by the special order What is the impact on opereting income if the company accepts the special order? OA. Decrease by S0,400 B. Increase by S60.400 C. Increase by S240.000 O D. Dorease by $246,000

Explanation / Answer

Sale (1200*205) 246000 Less: variable manufacturing cost 126000 (105*1200) Variable marketing & administrative 39600 Increase in net operating income by special order 80400 Option B Increase by $80400 If satisfied you can rate the answer

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