Boca Raton company had the following financial results last year:
Sales 20,000 units $ 144,000
Variable costs 56,000
Overhead (50% variable) 21,000
Other fixed costs 12,000
Operating income $ 55,000
A foreign company, whose sales will not affect Boca's regular sales, offers to buy 1,000 units at $6.00 per unit. There would be shipping costs of $500 in total on these units. How would this order affect operating income? Explain.
Increase by ______________________________
Decrease by ______________________________
The solution explains the effect of special order on the operating income.