The Following Information Relates to Current Production of Bench Seats

question 115

Multiple Choice

The following information relates to current production of bench seats for boats at Aquamarine Manufacturing: $$\begin{array} { | l | c c | } \hline \text { Variable manufacturing costs per unit } & \$ & 102.00 \\\hline \text { Tatal fixed manufacturing costs } & \$ & 525,000 \\\hline \text { Variable marketing and administrative costs per unit } & \$ & 30.00 \\\hline \text { Total fixed marketing and adrinistrative costs } & \$&250,000 \\\hline\end{array}$$
- The regular selling price per bench seat is $200.00.The company is analyzing the opportunity to accept a special sales order for 2,500 bench seats at a price of $155.00 per unit.Fixed costs would increase by $10,000.The company has the capacity to produce 15,000 bench seats per year,but is currently producing and selling 10,000 bench seats per year.Regular sales will not be affected by the special order.If the company were to accept this special order,how would operating income be affected?

• A)Decrease by $57,500
• B)Increase by $57,500
• C)Decrease by $47,500
• D)Increase by $47,500

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Definitions:

Carriers

Companies that provide transportation services for goods, including freight companies, airlines, and shipping lines.

Customers

Individuals or entities that purchase goods or services from a company.

Direct Shipping Network

A direct shipping network is a distribution model that ships products directly from suppliers to consumers, eliminating intermediaries.

Intermediate Warehouses

Facilities used to store goods temporarily during the middle stages of the supply chain, typically between the manufacturer and the final distribution centers.