Sky High Seats manufactures seats for airplanes. The company has the capacity to produce? 100,000 seats per? year, but is currently produces and sells? 75,000 seats per year. The following information relates to current production of? seats:
Sale price per unit
?$400
Variable costs per? unit:
Manufacturing
?$220
Marketing and administrative
?$50
Total fixed? costs:
Manufacturing
?$750,000
Marketing and administrative
?$200,000
If a special sales order is accepted for? 2,500 seats at a price of? $320 per? unit, fixed costs increase by? $5,000, and variable marketing and administrative costs for that order are? $25 per? unit, how would operating income be? affected? (NOTE: Assume regular sales are not affected by the special? order.)
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