Use the Information Below to Answer the Following Question(s)

question 67

Multiple Choice

Use the information below to answer the following question(s) :
The following information relates to current production of bench seats for boats at Aquamarine Manufacturing:

The regular selling price per bench seat is $200. 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.
-Aquamarine Manufacturing is analyzing the opportunity to accept a special sales order for 3,000 bench seats at a price of $140 per unit. Variable marketing and administrative costs would be $15 per unit lower than on regular sales. Fixed costs would increase by $10,000. 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 $69,000
• B) Decrease by $59,000
• C) Increase by $69,000
• D) Increase by $59,000

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Definitions:

Item Analysis

A series of statistical tests and procedures that can be used to assess for homogeneity in a test.

Construct Validity

The degree to which a test accurately measures the theoretical construct or concept it is intended to measure.

Content Validity

The ability of an instrument to fully assess or measure a construct of interest by sufficiently sampling from the entire universe of items for which the instrument was designed to sample.

Well-Established Construct

A concept or theory that has been extensively researched and validated, demonstrating consistent and reliable findings across studies.