If Ayayai accepts this order, by how much will its income increase or decrease?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following operating information reports the results of Ayayai Company’s production and sale of 12,500 air-conditioned motorcycle helmets last year. Based on early market forecasts , Ayayai expects the same results this year.
The American Motorcycle Club has offered to purchase 1,600 helmets at a price of $100 each. Ayayai has sufficient idle capacity to fill the order, which would not affect the company’s cost structure or regular sales.
If Ayayai accepts this order, by how much will its income increase or decrease?
| Sales | $2,026,000 | ||
| Variable manufacturing expenses | 862,000 | ||
| Fixed manufacturing expenses | 279,000 | ||
| Variable selling and administrative expenses | 112,000 | ||
| Fixed selling and administrative expenses | 229,000 |
The American Motorcycle Club has offered to purchase 1,600 helmets at a price of $100 each. Ayayai has sufficient idle capacity to fill the order, which would not affect the company’s cost structure or regular sales.
If Ayayai accepts this order, by how much will its income increase or decrease?
| Operating income will select an option decreaseincrease by $enter a dollar amount . |
Transcribed Image Text:The following operating information reports the results of Ayayai Company's production and sale of 12,500 air-conditioned
motorcycle helmets last year. Based on early market forecasts, Ayayai expects the same results this year.
Sales
$2,026,000
Variable manufacturing expenses
862,000
Fixed manufacturing expenses
279,000
Variable selling and administrative expenses
112,000
Fixed selling and administrative expenses
229,000
The American Motorcycle Club has offered to purchase 1,600 helmets at a price of $100 each. Ayayai has sufficient idle capacity to
fill the order, which would not affect the company's cost structure or regular sales.
If Ayayai accepts this order, by how much will its income increase or decrease?
Operating income will
by $
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