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

question 7

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 2,000 sails at a price of $220 per unit, and fixed costs increase by $7,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

• A) Decrease by $3,000
• B) Increase by $103,000
• C) Increase by $3,000
• D) Increase by $10,000

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Definitions:

Bias

A tendency to lean in a certain direction, often to the detriment of an open mind; in statistics, a systematic error introduced into sampling or testing.

Bipolar Disorder

A mood disorder in which the person alternates between the hopelessness and lethargy of depression and the overexcited state of mania. Formerly called manic-depressive disorder.

Anxiety Disorder

A category of mental health disorders characterized by significant and persistent fear, anxiety, or avoidance behaviors.

Lethargic Hopelessness

A state characterized by a lack of energy and a pervasive sense of despair or pessimism.