Voyage Sail Makers manufactures sails for sailboats. The company has the capacity to produce 37,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production: Sales price per unit $185 Variable costs per unit: Manufacturing $60 Selling and administrative $20 Total fixed costs: Manufacturing $700,000 Selling and administrative $300,000 If a special pricing order is accepted for 5,700 sails at a sales price of $170 per unit, and fixed costs remain unchanged, what is the change in operating income? (Assume the special pricing order will require variable manufacturing costs and variable selling and administrative costs.)
Voyage Sail Makers manufactures sails for sailboats. The company has the capacity to produce 37,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production: Sales price per unit $185 Variable costs per unit: Manufacturing $60 Selling and administrative $20 Total fixed costs: Manufacturing $700,000 Selling and administrative $300,000 If a special pricing order is accepted for 5,700 sails at a sales price of $170 per unit, and fixed costs remain unchanged, what is the change in operating income? (Assume the special pricing order will require variable manufacturing costs and variable selling and administrative costs.)
Chapter10: Short-term Decision Making
Section: Chapter Questions
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Voyage Sail Makers manufactures sails for sailboats. The company has the capacity to produce 37,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production:
|
Sales price per unit
|
$185
|
|
Variable costs per unit:
|
|
|
Manufacturing
|
$60
|
|
Selling and administrative
|
$20
|
|
Total fixed costs:
|
|
|
Manufacturing
|
$700,000
|
|
Selling and administrative
|
$300,000
|
If a special pricing order is accepted for 5,700 sails at a sales price of $170
per unit, and fixed costs remain unchanged, what is the change in operating income? (Assume the special pricing order will require variablemanufacturing costs and variable selling and administrative costs.)
per unit, and fixed costs remain unchanged, what is the change in operating income? (Assume the special pricing order will require variable
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