Sky high seats manufactures seats for airplanes. the company has the capacity to produce 100,000 seats per year, but is currently

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Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats annually. The following information relates to the current production of seats: (click the icon to view the data). If a special sales order is accepted for 3,000 seats at a price of $330 per unit, and fixed costs increase by $13,000, how would this affect operating income? (Note: assume that regular sales are not impacted by the special order.)

Anonymous · Accepted Answer

$Sale price                            400Variable costManufacturing                        250 Marketing and administrative40Total Fixed cost :Manufacturing                         790,000Marketing and administrative200,000Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently produces and sells 75,000 seats per year. The following information relates to current production of seats: If a special sales order is accepted for 3,100 seats at a price of $330 per unit, and fixed costs increase by $15,000, how would operating income be affected? A. Increase by $109,000 B. Decrease by $109.000 C. Increase by $124,000 D. Increase by $233,000 Answer :      a) Increase by  $109,000Explanation:The relevant cost for decision to accept the special order areI. the incremental contribution from of producing 3,100 units2. The incremental fixed cost- 15,000Note that whether or not the special order is accepted the manufacturing and Marketing and administrative fixed cost of   790,000 200,000 would be incurred either way.Contribution per unit =Selling price - Variable cost                                   = $330 - (250+40) = $40Incremental contribution = $40 × 3,100 =  $124,000 Operating income would increase by = $124,000 -$ 15,000                                                            = $109,000

Anonymous · Answer

Increase in Income= $232,500Explanation:Giving the following information: If a special sales order is accepted for 2,500 seats for $320 per unit, fixed costs increase by $5,000, and variable marketing and administrative costs for that order are $25 per unit.Variable costs per unit:Manufacturing= $220Mkt and administrative=25Total= 225Fixed costs= 5,000Increase in Income= 2,500*320 - 225*2500 - 5000= $232,500

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Sky high seats manufactures seats for airplanes. the company has the capacity to produce 100,000 seats per year, but is currently

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Sky high seats manufactures seats for airplanes. the company has the capacity to produce​ 100,000 seats per​ year, but is currently

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Sky high seats manufactures seats for airplanes. the company has the capacity to produce 100,000 seats per year, but is currently