Answer:
The operating income would increase by a value of $81,400
Explanation:
The operating income is an accounting tool that can be used to gauge the profit from business activities.
We can use this formula to calculate the initial operating income as follows;
Initial operating income=Total revenue from sales-cost of goods sold
where;
Total revenue from sales=sale price per unit×number of units sold
Sale price per unit=$41
number of units sold=75,000
Total revenue from sales=(41×75,000)=$3,075,000
Cost of goods sold=Total fixed cost+total variable cost per unit
Total fixed cost=Manufacturing+marketing and administrative=(76,000+22,000)=$98,000
Total variable cost=Manufacturing+marketing and administrative=(23×75,000)+(9×75,000)=2,550,000
Cost of goods sold=98,000+2,550,000=$2,648,000
Initial operating income=3,075,000-2,648,000=$427,000
Final operating income after accepting the special order=Final revenue-final cost of goods sold
Final revenue=(2,600×35)=91,000
Final cost of goods=7,000+(1×2,600)=9,600
Final operating income after accepting the special order=(91,000-9,600)=81,400
Total operating income=(Initial operating income+final operating income)
Total operating income=$427,000+81,400=$508,400
The operating income would increase by a value of $81,400
