If a special sales order is accepted for 8,100 widgets at a price of $39 per unit, and fixed costs increase by $13,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

Question

Business

Turner Compton

30 October, 15:41

If a special sales order is accepted for 8,100 widgets at a price of $39 per unit, and fixed costs increase by $13,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)

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Cesar Villa · Answer 1

D) Increase by $68,000

Explanation:

The computation of change in the operating income is shown below:

Sales (8,100 widgets * $39) $315,900

Less: Variable cost (8,100 widgets * $29) ($234,900)

Contribution margin $81,000

Less: Increase in fixed assets - $13,000

Net income increased $68,000

We simply applying the above format so that the change in the operating income could be find out. Since the net income is in positive so it shows an increment