This Test: 100 pts possible This Question: 3 pts 23of28(D complete) 000 sals per

Question

This Test: 100 pts possible This Question: 3 pts 23of28(D complete) 000 sals per year The tollowing information relates i has the capacoity to produce 36,000 sails per year and is cursentty producing and seling 30 Voyage Sal Makers manuracthures sails for salbcets. The company current production $180 Sales price per unt Variable costs per unt Manuflacturing Seling and administralive Total fxed costs 675,000 300,000 Seling and administraive operaing ncome? (Asume the specal pring oder wit eqie vriabe s a special pricing order is nccepted for $,700 sals at a sales prce of $100 per unt and faed sts emain unchanged, What is the change in mandactuing costs and variable seling and atministralive costs O A. Operating noome decreases by $513,000 O 8. Operaing ncome decreases by $912.000 O C. Operaing income increases ty 912.000 OD. Opening ncome increases by S513000

Explanation / Answer

Impact on operating income :

so answer is d) Operating income increases by $513000

Incremental revenue (5700*160) 912000 Less: Incremental cost Variable manufacturing cost (5700*60) (342000) Variable selling and administrative cost (5700*10) (57000) Incremental operating income 513000

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