Answer:
The operating income would be affected with a los off $716,000 besides the $95,000 that the company losses operating with the regular order.
Explanation:
Ok with the information provided lets set up the equations (we are going to separate the equations by regular order and especial order):
Regular order:
CT = 775,000 + 132X (Total cost)
TR= 200X (Total Revenue)
OI = 68X - 775,000 (Operating Income)
Especial order:
CT = 785,000 + 117X (Total cost)
TR = 140X (Total Revenue)
OI = 23X - 785,000 (Operating Income)
Now lets see how the operating income is with the production and selling of 10,000 bench seats:
OI = 68(10,000) - 775,000 = -95,000
This company operates at a loss of $95,000, now lets see how would operating income be affected by the especial order of 3,000 bench seats:
OI = 23(3,000) - 785,000 = -716,000
Another loss, so the operating income would be affected with a los off $716,000 besides the $95,000 that the company losses operating with the regular order.
