Comfort Cloud manufactures seats for airplanes. The company has the capacity to
ID: 2500318 • Letter: C
Question
Comfort Cloud manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producces and sells 75,000 seats per year. The following information relates to current production of seats. If a special sales order is accepted for 5,500 seats at a price of $325 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, What information provided in the table is not relevant information for the decision? How would operating income be affected by taking the special order? What is the minimum price Comfort Cloud should accept for a special order? If Comfort Cloud were operating at maximum capaciaty, 100,000 units, what would be the minimum price it should take for a special order?Explanation / Answer
a) total fixed cost is not relvenat information for the decision
b) speical order
Sales($325 ) - Vairble cost manufacturing $220 = $105 contribution per unit
hence increase in profit = $5500 *105 = $577,500
c) minimum price = $220
d) minimum price = $220 + $20 = $270