Sky High Seats 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 the current production of the product: Sale price per unit $430 Variable costs per unit: Manufacturing $240 Marketing and administrative $60 Total fixed costs: Manufacturing $800,000 Marketing and administrative $210,000 If a special sales order is accepted for 7,200 seats at a price of $390 per unit, and fixed costs remainunchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
Sky High Seats 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 the current production of the product: Sale price per unit $430 Variable costs per unit: Manufacturing $240 Marketing and administrative $60 Total fixed costs: Manufacturing $800,000 Marketing and administrative $210,000 If a special sales order is accepted for 7,200 seats at a price of $390 per unit, and fixed costs remainunchanged, 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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Question
Sky High Seats 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 the current production of the product:
|
Sale price per unit |
$430 |
|
Variable costs per unit: |
|
|
Manufacturing |
$240 |
|
Marketing and administrative |
$60 |
|
Total fixed costs: |
|
|
Manufacturing |
$800,000 |
|
Marketing and administrative |
$210,000 |
If a special sales order is accepted for 7,200 seats at a price of $390 per unit, and fixed costs remainunchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
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