Clear Sky Sailmakers manufactures sails for sailboats. The company has the capacity to produce 15,000 sails per year, but is currently producing and selling 10,000 sails per year. The following information relates to current production: Sale price per unit $250     Variable costs per unit:        Manufacturing $157      Marketing and administrative $42     Fixed Cost per Unit        Manufacturing $75      Marketing and administrative $20 If a special sales order is accepted for 4,910 sails at a price of $234 per unit, and fixed costs remain unchanged, how would operating income be affected? (assume regular sales are not affected by the special order)  If accepting the special order would reduce income, use a negative number for your answer.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Clear Sky Sailmakers manufactures sails for sailboats. The company has the capacity to produce 15,000 sails per year, but is currently producing and selling 10,000 sails per year. The following information relates to current production:

Sale price per unit

$250

 

 

Variable costs per unit:

 

     Manufacturing

$157

     Marketing and administrative

$42

 

 

Fixed Cost per Unit

 

     Manufacturing

$75

     Marketing and administrative

$20

If a special sales order is accepted for 4,910 sails at a price of $234 per unit, and fixed costs remain unchanged, how would operating income be affected? (assume regular sales are not affected by the special order)  If accepting the special order would reduce income, use a negative number for your answer.

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