Craco Inc. manufactures baby cribs and has the capacity to produce 100,000 cribs per year. It currently produces and sells 75,000 cribs per year. The following information relates to current production:
Sale price per unit
Variable costs per unit:
Manufacturing
Marketing and administrative
Total fixed costs:
Manufacturing
Marketing and administrative
$425
$240
$50
$750,000
$240,000
If a special sales order is accepted for 3,000 cribs at a price of $325 per unit, and fixed costs increase by $23,000, how would operating income be affected? (Assume regular sales are not affected by the special order.)
Decrease by $82,000
Increase by $232,000
Increase by $105,000
Increase by $82,000
