Question: Fruit Computer Company makes special fruit themed computers. Each unit sells for $410. Fruit Computer Company produces and sells 12,700 units per year. They have
Fruit Computer Company makes special fruit themed computers. Each unit sells for $410. Fruit Computer Company produces and sells 12,700 units per year. They have provided the following income statement data: $5,207.000 Traditional Format Revenue Cost of goods sold Gross profit Selling & admin. expenses Contribution Format $5,207,000 Revenue 2.900.000 Variable costs: 2,307,000 Manufacturing 900,000 400,000 3,907,000 625.000 Selling & admin. Contribution margin Fixed costs: Manufacturing Selling & admin $1,682,000 Operating income 2,000,000 225.000 $1,682,000 Operating income A foreign company has offered to buy 75 units for a reduced sales price of $300 per unit. The marketing manager says the sale will not affect the company's regular sales. The sales manager says that this sale will require variable selling and administrative costs. The production manager reports that it would require an additional $20,000 of fixed manufacturing costs to accommodate the specifications of the buyer. If Fruit Computer Company accepts the deal, how will this impact operating income? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) Operating income will increase by $5178 Operating income will decrease by $14,823, Operating income will increase by $22,500 Operating income will decrease by $5178
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