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QUESTION 15 Sky High Seats manufactures seats for airplanes. The company has the capacity to produce...

QUESTION 15

  1. Sky High Seats 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 the current production of the product:

    Regular selling price per unit

    $400

    Variable costs per unit:

    Manufacturing

    $220

    Marketing and administrative

    $50

    Total fixed costs:

    Manufacturing

    $1,500,000

    Marketing and administrative

    $1,000,000

    If a special sales order is accepted for 7,000 seats at a price of $350 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

    Increase by $800,000

    Increase by $245,000

    Decrease by $350,000

    Increase by $560,000

    Decrease by $157,500
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Sky High Seats 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

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