The Following Information Relates to Current Production of Bench Seats

question 160

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 3,000 bench seats at a price of $175.00 per unit.Fixed costs would remain unchanged.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)Increase by $129,000
• B)Increase by $525,000
• C)Decrease by $129,000
• D)Decrease by $525,000

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Definitions:

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