Answered: If Ayayai accepts this order, by how…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 40E

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The following operating information reports the results of Ayayai Company’s production and sale of 12,500 air-conditioned motorcycle helmets last year. Based on early market forecasts, Ayayai expects the same results this year.

Sales		$2,026,000
Variable manufacturing expenses		862,000
Fixed manufacturing expenses		279,000
Variable selling and administrative expenses		112,000
Fixed selling and administrative expenses		229,000

The American Motorcycle Club has offered to purchase 1,600 helmets at a price of $100 each. Ayayai has sufficient idle capacity to fill the order, which would not affect the company’s cost structure or regular sales.

If Ayayai accepts this order, by how much will its income increase or decrease?

Operating income will select an option decreaseincrease by $enter a dollar amount .

The following operating information reports the results of Ayayai Company's production and sale of 12,500 air-conditioned
motorcycle helmets last year. Based on early market forecasts, Ayayai expects the same results this year.
Sales
$2,026,000
Variable manufacturing expenses
862,000
Fixed manufacturing expenses
279,000
Variable selling and administrative expenses
112,000
Fixed selling and administrative expenses
229,000
The American Motorcycle Club has offered to purchase 1,600 helmets at a price of $100 each. Ayayai has sufficient idle capacity to
fill the order, which would not affect the company's cost structure or regular sales.
If Ayayai accepts this order, by how much will its income increase or decrease?
Operating income will
by $

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