Widget Inc. manufactures widgets. The company has the capacity to produce 100,000 widgets per year, but it currently produces and sells 75,000 widgets per year. The following information relates to current production: Sales price per unit Variable costs per unit: Manufacturing Marketing and administrative $45 $25 $6 Total fixed costs: Manufacturing $76,000 $24,000 Marketing and administrative If a special sales order is accepted for 6900 widgets at a price of $37 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Increase by $255,300 Decrease by $41,400 Increase by $1,800,000 Increase by $41,400
Widget Inc. manufactures widgets. The company has the capacity to produce 100,000 widgets per year, but it currently produces and sells 75,000 widgets per year. The following information relates to current production: Sales price per unit Variable costs per unit: Manufacturing Marketing and administrative $45 $25 $6 Total fixed costs: Manufacturing $76,000 $24,000 Marketing and administrative If a special sales order is accepted for 6900 widgets at a price of $37 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Increase by $255,300 Decrease by $41,400 Increase by $1,800,000 Increase by $41,400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Widget Inc. manufactures widgets. The company has the capacity to produce
100,000 widgets per year, but it currently produces and sells 75,000 widgets per
year. The following information relates to current production:
Sales price per unit
Variable costs per unit:
Manufacturing
Marketing and administrative
$45
$25
$6
Total fixed costs:
Manufacturing
Marketing and administrative
If a special sales order is accepted for 6900 widgets at a price of $37 per unit,
and fixed costs remain unchanged, how would operating income be affected?
(NOTE: Assume regular sales are not affected by the special order.)
Increase by $255,300
Decrease by $41,400
Increase by $1,800,000
Increase by $41,400
$76,000
$24,000
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