Centric Sail Makers Manufactures Sails for Sailboats

question 29

Multiple Choice

Centric Sail Makers manufactures sails for sailboats.The company has the capacity to produce 35,000 sails per year,and is currently producing and selling 25,000 sails per year.The following information relates to current production:
- If a special sales order is accepted for 5,500 sails at a price of $150 per unit,and if the order requires both variable manufacturing and variable marketing and administrative costs,and incremental fixed costs of $400,000,what will be the impact on operating income?

• A)Operating income decreases by $385,000.
• B)Operating income decreases by $15,000.
• C)Operating income increases by $385,000.
• D)Operating income increases by $15,000.

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Definitions:

Free Radical Bromination

A chemical reaction process whereby bromine radicals (Br.) selectively react with C-H bonds in hydrocarbons to form brominated products.

Methane

The simplest alkane, a colorless, odorless gas (CH4), that is the main component of natural gas and a potent greenhouse gas.

Transition State

A high-energy state during a chemical reaction that represents the point of highest energy through which reactants must pass before forming products.

Resonance Stabilized Radical

A radical species whose stability is enhanced by the distribution of its unpaired electron over multiple atoms via resonance.