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How would operating income be impacted

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Question - Kramerica Industries had no beginning inventory and the following information on its only product.

Sale price per unit: $16.00

Direct materials used: $160,000

Direct labor incurred: $205,000

Variable manufacturing overhead: $150,000

Variable selling and administrative expenses: $85,000

Fixed manufacturing overhead: $95,000

Fixed selling and administrative expenses: $20,000

Units produced and sold: 50,000

How would operating income be impacted if Kramerica accepted a special order of 8,000 units at a price of $11, which allowed for $4,000 in fixed costs to be avoided?

a. Decrease $246,000

b. Increase $54,400

c. Decrease $4,000

d. Increase $33,600

Reference no: EM132612299

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