The Following Information Relates to Current Production of Outdoor Chaise

question 95

Multiple Choice

The following information relates to current production of outdoor chaise lounges at Backyard Posh:

The regular selling price per chaise lounge is $300.00.The company is analyzing the opportunity to accept a special sales order for 1,200 chaise lounges at a price of $225.00 per unit.Fixed costs would remain unchanged.The company has the capacity to produce 15,000 chaise lounges per year,but is currently producing and selling 10,000 chaise lounges per year.Regular sales will not be affected by the special order.What is the impact on operating income if the company accepts the special order?

• A)Increase by $270,000
• B)Increase by $111,600
• C)Decrease by $111,600
• D)Decrease by $270,000

---

Definitions:

Loud Noise

A type of environmental stimulus characterized by high amplitude sound waves, which can potentially cause hearing damage or stress.

Unconditioned Response

Is an automatic, natural reaction to a stimulus that occurs without prior conditioning or learning, such as salivating in response to food.

Fear of Loud Noise

An instinctual or conditioned response to loud sounds, often involving feelings of anxiety or panic.

Conditioned Response

A learned reaction to a previously neutral stimulus that results from repeated exposure to a stimulus paired with a response.