gardner sail makers manufactures sales for sailboats the company has the capacit
ID: 2580494 • Letter: G
Question
gardner sail makers manufactures sales for sailboats the company has the capacity to produce 37,000 sales per year and is currently producing and selling 30,000 in sales per year the following information relates to current production: ACCT 1020 600 -Fall 2017 - Coclin DL Managerial Test: Exam # 11: Chapter 25 Time Remaining: 00:48.45 Submit Te This Question: 1 pt 1 0 of 20 (9 complete) This Test: 20 pts possi Gardner Sail Makers manufactures sails for sailboats. The company has the capacity to produce 37,000 sails per year and is curently producing and selling 30,000 sails per year. The following information relates to current production: Sales price per unit Variable costs per unit: S185 675,000 $250,000 Manufacturing Selling and administrative Assume that a special pricing order is accepted for 5,500 sails at a sales price of $150 per unit. This special order requires both variable manufacturing and variable selling and administrative costs, as well as incremental fixed costs of $400,000. What will be the impact on operating income? 0 A. Operating income decreases by S37.000 B. Operating income increases by S37.000. O C. Operating income increases by $363,000 0 D. Operating income decreases by $363,000Explanation / Answer
Correct answer is Option A i.e. Operating income decreases by $37,000
Particulars Amount Revenue (5,500 x $150) $825,000 Less: Variable Manufacturing cost (5,500 x $62) $341,000 Variable Selling and admin. Cost (5,500 x $22) $121,000 Avoidable Fixed Cost $400,000 Operating Income ($37,000)Related Questions
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