Lighthouse Sail Makers manufactures sails for sailboats
The company has the capacity to produce 35,000 sails per year and is currently producing and selling 30,000 sails per year. The following information relates to current production:
Sales price per unit $185
Variable costs per unit:
Manufacturing $60
Selling and administrative $22
Total fixed costs:
Manufacturing $700,000
Selling and administrative $300,000
The fixed manufacturing costs increase by $100,000 for every 500 units produced beyond the maximum capacity of the plant. If a special pricing order is accepted for 5,500 sails at a sales price of $160 per unit, and if the order requires no variable or fixed selling and administrative costs, what is the effect on operating income?
A) Operating income increases by $450,000.
B) Operating income decreases by $450,000.
C) Operating income increases by $550,000.
D) Operating income decreases by $550,000.
A .A)
Sales revenue (5,500 x 160 ) $880,000
Variable costs:
Manufacturing (5,500 x 60 ) 330,000
Fixed costs:
Manufacturing 100,000
Operating income $450,000
You might also like to view...
Clearwater Hampers is a small British company that sells luxury food and drink in various combinations in picnic hampers. Food and wine are seen as classic, fail-safe gifts in a market where present-buying is increasingly tricky. Corporate customers, both in the United Kingdom and abroad, are important to the business. Clearwater has had several orders for more than a quarter of a million dollars. The company's leading salesperson is Peter Austin, who sees his company "as a service company rather than a food and drink business. Our priority is to get the hampers out on time, filled with the right products." Austin often checks to see if his customers are satisfied with his service.Which of the following statements is most likely Austin's sales philosophy?
A. Increased sales transactions improve customer satisfaction. B. Customer satisfaction leads to lowered sales expectations. C. Partnering/consultative selling eliminates a customer's cognitive dissonance. D. Customer services requires technology. E. Customer service improves customer retention.
Identify five companies that in your opinion have failed to change with time and have either pulled out of the marketplace or continue in it as laggards.
What will be an ideal response?
Publicity, public relations, and corporate advertising are integral parts of the overall promotional effort.
Answer the following statement true (T) or false (F)
Why do people share content via social media channels?
a. They find it interesting and/or entertaining. b. They think it can be helpful to others. c. They want to get a laugh. d. A & B Only. e. All of these.