Answer:
Addition to operating income by sepcial order is $22,500
Explanation:
As the fixed cost is covered by other production. It is not been accounted for in this order. It is an avoidable cost regarding this project.
Special order 15,000 pairs
Sale receipt = 15,000 pairs x $7.50 = $112,500
Variable cost = 15,000 pairs x $5 = $75,000
Gross Income = $112,500 - $75,000 = $37,500
Variable Selling Expense = 15,000 pairs x $1
Variable Selling Expense = $15,000
Operating Income = Gross Income - Variabe selling price
Operating Income = $37,500 - $15,000
Operating Income = $22,500
