Backyard Living sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:

* $ 1,800,000 / 75,000 units
Backyard Living has enough idle capacity to accept a one-time-only special order from Superstore,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Backyard Living will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Backyard Living's operating income?

Question

Backyard Living sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:
  
* $ 1,800,000 / 75,000 units
Backyard Living has enough idle capacity to accept a one-time-only special order from Superstore,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Backyard Living will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Backyard Living's operating income?

Quizplus · Accepted Answer

The Answer of Backyard Living sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:
  
* $ 1,800,000 / 75,000 units
Backyard Living has enough idle capacity to accept a one-time-only special order from Superstore,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Backyard Living will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Backyard Living's operating income?

Backyard Living Sells Its Barbecue Sets for $170 Each