Sprint Company makes special equipment used in cell towers. Each unit sells for $400. Sprint produces and sells 12,500 units per year. They have provided the following income statement data:
A foreign company has offered to buy 80 units for a reduced price of $300 per unit. The marketing manager says the sale will not negatively affect the company's regular sales. The sales manager says that this sale will require incremental selling & administrative costs, as it is a one-time deal. The production manager reports that it would require an additional $30,000 of fixed manufacturing costs to accommodate the specifications of the buyer. If Sprint accepts the deal, how will this impact operating income?
A) operating income will increase by $5,440
B) operating income will decrease by $14,960
C) operating income will increase by $24,000
D) operating income will decrease by $800
Correct Answer:
Verified
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