income be affected
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lowwater Sailmakers manufactures sails for sailboats. The company has the
capacity to produce 25,000 sails per year, but is currently producing and
selling 20,.000 sails per year, The following information relates to current
production. If a special sales order is accepted for 2,000 sails at a price of
$87 per unit, and fixed costs increase by $20,000, how would operating
income be affected? (NOTE: Assume regular sales are not affected by the
special order.)
Sale price per unit
$150
Variable costs unit:
per
Manufacturing
Marketing and administrative
$60
$20
Total fixed costs:
Manufacturing
Marketing and administrative
S600,000
$200 000
Increase by S14,000
Decrease by S4,000 )
Decrease by S14,000 )
Decrease by S6,000 ()
Increase by S6,000 ()
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