The Following Information Relates to Current Production of Outdoor Chaise

question 237

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. The company is analyzing the opportunity to accept a special sales order for 1100 chaise lounges at a price of $215 per unit. Fixed costs would remain unchanged. The company has the capacity to produce 135,000 chaise lounges per year, but is currently producing and selling 12,000 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 $236,500
• B)Increase by $80,300
• C)Decrease by $80,300
• D)Decrease by $236,500

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Definitions:

Independent Samples

Samples in which the selection of individuals in one sample does not influence, or is not related to, the selection of individuals in another sample.

Selection Process

The method by which candidates are screened and selected for a position, task, or inclusion in a study, often involving steps like application, assessment, and interview.

Expected Value

The anticipated value of a variable in a probability distribution; it represents the mean of the distribution.

Pooled Variance Estimate

An estimate of variance that combines the variances from two or more samples, assuming that the variances from the different populations are the same.