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7. Istanbul company manufactures bikes the company has the capacity to produce 37,000 bikes per year and is currently producing and selling 25,000 bikes per year. The following information relates to current production: $185 Selling price per unit Variable costs per unit Manufacturing $60 Selling and administrative $20 Total fixed cost Manufacturing $700,000 Selling and administrative $300,000 If a special pricing is accepted for 5,600 bikes at a sales price of $160 per unit, fixed costs remain unchanged, and there are no variable selling and administrative costs for this order, what is the change in operating income? A. Increase by $448,000 B. Remain the same C. Decrease by $448,000 D. Decrease by $560,000

7. Istanbul company manufactures bikes the company has the capacity to produce 37,000 bikes per year and is currently producing and selling 25,000 bikes per year. The following information relates to current production: $185 Selling price per unit Variable costs per unit Manufacturing $60 Selling and administrative $20 Total fixed cost Manufacturing $700,000 Selling and administrative $300,000 If a special pricing is accepted for 5,600 bikes at a sales price of $160 per unit, fixed costs remain unchanged, and there are no variable selling and administrative costs for this order, what is the change in operating income? A. Increase by $448,000 B. Remain the same C. Decrease by $448,000 D. Decrease by $560,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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7. Istanbul company manufactures bikes the company has the capacity to produce 37,000 bikes per year and is currently producing and selling 25,000 bikes per year. The following information relates to current production: $185 Selling price per unit Variable costs per unit Manufacturing $60 Selling and administrative $20 Total fixed cost Manufacturing $700,000 Selling and administrative $300,000 If a special pricing is accepted for 5,600 bikes at a sales price of $160 per unit, fixed costs remain unchanged, and there are no variable selling and administrative costs for this order, what is the change in operating income? A. Increase by $448,000 B. Remain the same C. Decrease by $448,000 D. Decrease by $560,000
Transcribed Image Text:7. Istanbul company manufactures bikes the company has the capacity to produce 37,000 bikes per year and is currently producing and selling 25,000 bikes per year. The following information relates to current production: $185 Selling price per unit Variable costs per unit Manufacturing $60 Selling and administrative $20 Total fixed cost Manufacturing $700,000 Selling and administrative $300,000 If a special pricing is accepted for 5,600 bikes at a sales price of $160 per unit, fixed costs remain unchanged, and there are no variable selling and administrative costs for this order, what is the change in operating income? A. Increase by $448,000 B. Remain the same C. Decrease by $448,000 D. Decrease by $560,000
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