Davis, Managerial Accounting. 3e & Practice Gradebook ORION Downloadable eTextbo

Question

Davis, Managerial Accounting. 3e & Practice Gradebook ORION Downloadable eTextbook ssignment Exercise 8- Your answer is partially correct. Try again. The folowing operating information reports the resuits of Sarasota Company's production and sale of 12,500 air-conditioned motorcycle helimets last year Besed on early market forecasts, Sarasota expects the same results this year. Fixed manufacturing expenses Variable selling and administrative Fixed seling and administrative expenses $1,961,000 829,000 279,000 122,000 227,000 The American Motorcycle Club has offered to purchese 1,600 helmets at a price of 100 each. Sarasota has sufficient idie capacity to fill the order, which would not afflect the company's cost structure or reqular sales. Ir Sarasota accepts this order, by how much will its income increase or Operating income wi nesei increase or decrease Click if you would like to Show Work for this question Question Attempte: 2 of S used save rok ur" 20

Explanation / Answer

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Sales Value is 1961000 for 12500 that is 156 Per unit approximately

Total variable Expenses Amount 951000For 12500 units that is 76.08

If the company accepts the order of 1600 units @ 100 each the amount of profit will be 24 per unit

That is 1600*24 =38400

The operating income will increase by 38400

Since company has a enough amount of idle work so fixed cost is not take. In consideration

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