Shady Inc. manufactures outdoor umbrellas. The company has the capacity to produce 100,000 units per year, but it currently produces and sells 75,000 units per year. The following information relates to current production: $44 Sale price per unit Variable costs per unit: Manufacturing Marketing and administrative Total fixed costs: Manufacturing Marketing and administrative $25 $9 OA. Increase by $5,000 B. Increase by $39,000 OC. Decrease by $5,000 OD. Increase by $44,600 $77,000 $25,000 If a special sales order is accepted for 4,400 umbrellas at a price of $39 per unit, and fixed costs increase by $17,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
Shady Inc. manufactures outdoor umbrellas. The company has the capacity to produce 100,000 units per year, but it currently produces and sells 75,000 units per year. The following information relates to current production: $44 Sale price per unit Variable costs per unit: Manufacturing Marketing and administrative Total fixed costs: Manufacturing Marketing and administrative $25 $9 OA. Increase by $5,000 B. Increase by $39,000 OC. Decrease by $5,000 OD. Increase by $44,600 $77,000 $25,000 If a special sales order is accepted for 4,400 umbrellas at a price of $39 per unit, and fixed costs increase by $17,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Shady Inc. manufactures outdoor umbrellas. The company has the capacity to produce 100,000 units per year, but it
currently produces and sells 75,000 units per year. The following information relates to current production:
Sale price per unit
$44
Variable costs per unit:
Manufacturing
Marketing and administrative
Total fixed costs:
Manufacturing
Marketing and administrative
$25
$9
A. Increase by $5,000
B. Increase by $39,000
C. Decrease by $5,000
D. Increase by $44,600
$77,000
$25,000
If a special sales order is accepted for 4,400 umbrellas at a price of $39 per unit, and fixed costs increase by $17,000, how
would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
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