Question

Х Data Table Sale price per unit $400 Variable costs per unit: Manufacturing Marketing and administrative $240 $70 Total fixeSky High Seats manufactures seats for airplanes. The company has the capacity to produce 75000 seats per year, but currently

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Answer #1

The operating income is analysed as follows:

$
Sale (7,400 Units * $350)        2,590,000
Less: Variable Cost:
Manufacturing (7,400 Units * $240)     (1,776,000)
Marketing and Administrative (7,400 Units * $70)      ( 518,000)
Contribution Margin          296,000
Increase in Fixed Cost       -
Increase in Operating Income      $296,000

Operating Income is increased by $296,000

So correct answer is option(C) or Increase by $296,000

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