Comfort Ride manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit $430 Variable costs per unit: Manufacturing Marketing and administrative $260 $70 Total fixed costs: Manufacturing Marketing and administrative $760,000 $240,000 If a special sales order is accepted for 4,400 seats at a price of $345 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.) ..... O A. Increase by $374,000 O B. Decrease by $374,000 O C. Increase by $2,662,000 O D. Increase by $66,000

Comfort Ride manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to current production of seats: Sale price per unit $430 Variable costs per unit: Manufacturing Marketing and administrative $260 $70 Total fixed costs: Manufacturing Marketing and administrative $760,000 $240,000 If a special sales order is accepted for 4,400 seats at a price of $345 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.) ..... O A. Increase by $374,000 O B. Decrease by $374,000 O C. Increase by $2,662,000 O D. Increase by $66,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 2CMA

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