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

question 45

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 3,000 sails at a price of $215 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

• A) Increase by $50,000
• B) Increase by $150,000
• C) Increase by $0
• D) Decrease by $50,000

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Definitions:

Transverse Abdominus

A major muscle in the abdominal wall that helps stabilize the trunk and maintain internal abdominal pressure.

Internal Oblique

A muscle layer in the abdomen that helps in trunk rotation and bending the body sideways.

External Oblique

A muscle in the abdomen that helps rotate the trunk and flex the vertebral column.

Scapula

The flat, triangular bone located in the upper back, commonly known as the shoulder blade.