Sky High Seats Manufactures Seats for Airplanes

question 112

Multiple Choice

Sky High Seats manufactures seats for airplanes.The company has the capacity to produce 100,000 seats per year,but currently produces and sells 75,000 seats per year.The following information relates to the current production of the product:

If a special sales order is accepted for 7,000 seats at a price of $350 per unit,and fixed costs remain unchanged,how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order. )

• A)Increase by $560,000
• B)Decrease by $560,000
• C)Increase by $2,450,000
• D)Increase by $8,000,000

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Definitions:

Loading Time

The time period required to prepare and load goods into transport vehicles or machinery, critical in logistics and manufacturing for determining overall efficiency and productivity.

Idle Time

The time during which resources, such as machinery or labor, are not being used for production, often due to lack of orders or maintenance.

Departments

Subdivisions within an organization, each specializing in a specific function or task, contributing to the overall objectives of the entity.

Dispatching Rules

Guidelines or policies used in production and operations management to control the order in which jobs or tasks are processed.