Reference no: EM133057497

Question - The following information relates to current production of outdoor wicker sofas at Backyard Posh:

Variable manufacturing costs per unit $105

Total fixed manufacturing costs $525,000

Variable marketing and administrative costs per unit $33

Total fixed marketing and administrative costs $250,000

The regular selling price per wicker sofa is $300. The company is analyzing the opportunity to accept a special sales order for 200 wicker sofas at a price of $230 per unit. Variable marketing and administrative costs would be $13 per unit lower than on regular sales. Fixed costs would increase by $15.000, The company has the capacity to produce 55,000 wicker sofas per year, but is currently producing and selling 13,000 wicker sofas per year. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected?