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produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit Variable costs per unit: Manufacturing Marketing and administrative $400 $220 $40 year,

produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit Variable costs per unit: Manufacturing Marketing and administrative $400 $220 $40 year,

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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Comfort Ride manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit Variable costs per unit: Manufacturing Marketing and administrative Total fixed costs: Manufacturing Marketing and administrative $400 $220 $40 $780,000 $200,000 If a special sales order is accepted for 4,300 seats at a price of $325 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
Transcribed Image Text:Comfort Ride manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit Variable costs per unit: Manufacturing Marketing and administrative Total fixed costs: Manufacturing Marketing and administrative $400 $220 $40 $780,000 $200,000 If a special sales order is accepted for 4,300 seats at a price of $325 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
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