Regular sales are not affected by the special order. There is a special order received for 2700 chairs at a price of $350 per unit. f the company decides to go ahead with the special order then fixed costs increase by $6,600, and variable marketing and administrative costs for that order are $1 per unit, f a special sales order is accepted how would operating income be affected? decrease of 222,000 increase of 287,700 increase of 81,000 increase of 296,000

Principles of Accounting Volume 2
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ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 3PB: Cinnamon Depot bakes and sells cinnamon rolls for $1.75 each. The cost of producing 500,000 rolls in...
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Lego Company manufactures chairs. Annual maximum capacity is 100,000. It currently produces and sells 75,000 chairs per
year. The following information relates to current production:
Sale price per unit
$430
Variable costs per unit:
Manufacturing
Marketing and administrative
Total fixed costs:
Manufacturing
$240
$80
$760,000
$220,000
Marketing and administrative
Regular sales are not affected by the special order. There is a special order received for 2700 chairs at a price of $350 per unit.
If the company decides to go ahead with the special order then fixed costs increase by $6,600, and variable marketing and
administrative costs for that order are $1 per unit,
If a special sales order is accepted how would operating income be affected?
decrease of 222,000
increase of 287,700
increase of 81,000
increase of 296,000
Transcribed Image Text:Lego Company manufactures chairs. Annual maximum capacity is 100,000. It currently produces and sells 75,000 chairs per year. The following information relates to current production: Sale price per unit $430 Variable costs per unit: Manufacturing Marketing and administrative Total fixed costs: Manufacturing $240 $80 $760,000 $220,000 Marketing and administrative Regular sales are not affected by the special order. There is a special order received for 2700 chairs at a price of $350 per unit. If the company decides to go ahead with the special order then fixed costs increase by $6,600, and variable marketing and administrative costs for that order are $1 per unit, If a special sales order is accepted how would operating income be affected? decrease of 222,000 increase of 287,700 increase of 81,000 increase of 296,000
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