Lowwater Sailmakers Manufactures Sails for Sailboats

question 13

Multiple Choice

Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year. The following information relates to current production: If a special sales order is accepted for 3,000 sails at a price of $75 per unit, fixed costs remain unchanged, and there are no additional variable marketing and administrative costs for this order, what is the change in operating income?

• A)Operating income decreases $5,000.
• B)Operating income decreases $36,000.
• C)Operating income increases $35,000.
• D)Operating income increases $60,000.

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Definitions:

Acquiescence Response Set

The tendency of some respondents to agree with many items on a questionnaire.

Questionnaire-Taking Style

The individual manner or approach a person adopts when responding to questions in a survey or questionnaire.

Degree of Association

A statistical measure that describes the level or strength of a relationship between two or more variables.

Correlation

A mathematical indicator showing how much two or more variables move in relation to each other.