Order affecting operating income


Question: 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.

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Accounting Basics: Order affecting operating income
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