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: Sale price per unit: $ 440
Variable costs per unit:
Manufacturing: $ 230
Marketing and administrative: $ 50
Total fixed costs:
Manufacturing: $800,000
Marketing and administrative: $220,000
If a special sales order is accepted for 7,000 seats at a price of $340 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A. Increase by $ 2,380,000
B. Increase by $ 420,000
C. Decrease by $ 420,000
D. Increase by $ 6,000,000
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