Please do not give solution in image format thanku 1. NAM manufactures yoga props such as straps and blocks. Straps are sold to customers at a price of $15 per strap. Thecompany is currently operating at 75% capacity with regard to strap production and produces 30,000 straps per year.At the current operating level, the cost of producing and selling a single strap is as follows:Variable Product CostsFixed Product CostsVariable Period Costs.Fixed Period CostsTotal Cost per Mat$3.201.300.500.45$5.45An order has been received from a chain of yoga studios for 12,000 straps at a special price of $10 per strap. If thespecial order is accepted, the unit variable manufacturing costs will increase by $0.20 per strap due to the addition of aspecial label the studio has requested be included on the straps. Additionally, the total fixed product costs will increaseby 5%. Variable period costs consist solely of sales commissions, which will not be paid on the special order. Fixedperiod costs will not be affected by acceptance of the special order.What is the effect on operating income if the special order is accepted? (indicate the amount and if operating income.would increase or decrease) (circle your final answer)

Sometimes business entities receive special orders which are different from the normal orders…

Answered: What is the effect on operating income…

What is the effect on operating income if the special order is accepted? (indicate the amount and if operating income would increase or decrease) (circle your final answer)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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