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Pisces Company manufactures sonars for fishing boats. Model 100 sells for $400. Pisces produces and sells 7,000 units per year. Cost data are as follows: $105 per unit $5 per unit $280,000 per year $130,000 per year Variable manufacturing Variable selling and administrative Fixed manufacturing Fixed selling and administrative An offer has come in for a one-time sale of 100 units at a special price of $140 per unit. The marketing manager says that the sale will not affect the company's regular sales activities, and that it will not require any variable selling and administrative costs. The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way. What is the effect of this deal on operating income? OA. Operating income increases by $3,500. B. Operating income increases by $500. $400. i OC. Operating income increases by OD. Operating income decreases by $3,500.

Pisces Company manufactures sonars for fishing boats. Model 100 sells for $400. Pisces produces and sells 7,000 units per year. Cost data are as follows: $105 per unit $5 per unit $280,000 per year $130,000 per year Variable manufacturing Variable selling and administrative Fixed manufacturing Fixed selling and administrative An offer has come in for a one-time sale of 100 units at a special price of $140 per unit. The marketing manager says that the sale will not affect the company's regular sales activities, and that it will not require any variable selling and administrative costs. The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way. What is the effect of this deal on operating income? OA. Operating income increases by $3,500. B. Operating income increases by $500. $400. i OC. Operating income increases by OD. Operating income decreases by $3,500.

FINANCIAL ACCOUNTING
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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Pisces Company manufactures sonars for fishing boats. Model 100 sells for $400. Pisces produces and sells 7,000 units per year. Cost data are as follows: $105 per unit $5 per unit $280,000 per year $130,000 per year Variable manufacturing Variable selling and administrative Fixed manufacturing Fixed selling and administrative i An offer has come in for a one-time sale of 100 units at a special price of $140 per unit. The marketing manager says that the sale will not affect the company's regular sales activities, and that it will not require any variable selling and administrative costs. The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way. What is the effect of this deal on operating income? OA. Operating income increases by $3,500. B. Operating income increases by $500. OC. Operating income increases by $400. OD. Operating income decreases by $3,500.
Transcribed Image Text:Pisces Company manufactures sonars for fishing boats. Model 100 sells for $400. Pisces produces and sells 7,000 units per year. Cost data are as follows: $105 per unit $5 per unit $280,000 per year $130,000 per year Variable manufacturing Variable selling and administrative Fixed manufacturing Fixed selling and administrative i An offer has come in for a one-time sale of 100 units at a special price of $140 per unit. The marketing manager says that the sale will not affect the company's regular sales activities, and that it will not require any variable selling and administrative costs. The production manager says that there is plenty of excess capacity and the sale will not impact fixed costs in any way. What is the effect of this deal on operating income? OA. Operating income increases by $3,500. B. Operating income increases by $500. OC. Operating income increases by $400. OD. Operating income decreases by $3,500.
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