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

question 59

Multiple Choice

Use the information below to answer the following question(s) :
Clear Sky Sailmakers manufactures sails for sailboats. The company has the capacity to produce 15,000 sails per year, but is currently producing and selling 10,000 sails per year. The following information relates to current production:

-If Clear Sky Sailmakers accepts a special order for 5,000 sails at a price of $225 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

• A) Increase by $1,125,000
• B) Increase by $50,000
• C) Decrease by $50,000
• D) Increase by $150,000

Analyze factors causing variances in variable and fixed overheads.

Understand the impact of production levels on budgeting and cost variance.

Calculate and interpret overhead variances including budget, volume, efficiency, and spending variances.

Recognize the implications of underutilizing productive capacity on costs.

---

Definitions:

Donald Super

A psychologist best known for his development of theories concerning career development and the concept of life-span, life-space.

Sexually Transmitted Disease

Infections that are primarily passed through person-to-person sexual contact.

Gonorrhea

A sexually transmitted infection caused by the bacterium Neisseria gonorrhoeae, characterized by painful urination and discharge.

White Blood Cells

Cells of the immune system involved in defending the body against both infectious disease and foreign invaders.