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Business, 21.05.2020 04:04 ian2006huang

The following information relates to current production of lawn chairs at Sunshine Inc. Variable manufacturing costs per unit$107Variable marketing & administrative costs per unit$35Total fixed manufacturing costs$555,000Total fixed marketing and administrative costs$300,000The regular selling price per lawn chair is $300. The company is analyzing the opportunity to accept a special sales order for 1100 lawn chairs at a price of $215 per chair. Fixed costs would remain unchanged, and the company would still incur variable marketing and administrative costs on the special order. The company has the capacity to produce 20,000 lawn chairs during the year, but is currently producing and selling 12,000 lawn chairs per year. Regular sales will not be affected by the special order. What is the impact on operating income if the company accepts the special order?

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