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 $45 Variable costs per unit Manufacturing Marketing and administrative $27 $6 Total fixed costs: Manufacturing $79,000 $20,000 Marketing and administrative If a special sales order is accepted for 8,200 umbrellas at a price of $37 per unit, and fixed costs increase by $16,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order OA. Increase by $16,800 OB. Increase by $48,800 OC. Increase by $66,000 O D. Decrease by $16,800

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 $45 Variable costs per unit Manufacturing Marketing and administrative $27 $6 Total fixed costs: Manufacturing $79,000 $20,000 Marketing and administrative If a special sales order is accepted for 8,200 umbrellas at a price of $37 per unit, and fixed costs increase by $16,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order OA. Increase by $16,800 OB. Increase by $48,800 OC. Increase by $66,000 O D. Decrease by $16,800

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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