Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

0 Nautical manufactures flotation vests in Orlando, Florida. Nautical's contribution margin Income statement for the most recent month contains the following data: (Click the icon

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

0 Nautical manufactures flotation vests in Orlando, Florida. Nautical's contribution margin Income statement for the most recent month contains the following data: (Click the icon to view the cost information.) Suppose Optimum Cruiselines wants to buy 5,800 vests from Nautical. Acceptance of the order will not increase Nautical's variable marketing and administrative expenses or any of its fixed expenses. The Nautical plant has enough unused capacity to manufacture the additional vests. Optimum Cruiselines has offered $11 per vest, which below the normal sale price of $15. Read the requirements. Requirement 1. Prepare an incremental analysis to determine whether Nautical should accept this special sales order. (Enter a "O" for any zero balances. Use parentheses or a minus sign to indicate a negative contribution margin and/or a decrease in operating income from the special order.) Total Order Per Unit (5,800 units) Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease operating income from the special order Decision: Requirem should consider in deciding whether to accept the special sales order. on operating profits, Nautical's managers also should consider the following: Accept the special sales order. Reject the special sales order. In addition Enter any number in the edit fields and then continue to the next question. Requirement 2. Identify long-term factors Nautical should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Nautical's managers also should consider the following: A. How will Nautical's competitors react? Will they retaliate by cutting their prices and starting a price war? B. Will Nautical's other customers find out about the lower sale price Nautical accepted from Optimum? If so, will these other customers demand lower sale prices? C. Will lowering the sale price tarnish Nautical's image as a quality brand? D. All of the above. E. None of the above. Enter any number in the edit fields and then continue to the next question. ? Data Table Nautical Contribution Margin Income Statement (Variable Costing) For Sales Volume of 33,000 Units Total Sales revenue $ 495,000 Less variable expenses: Variable manufacturing costs (DM, DL, Variable MOH) Variable operating expenses (selling and administrative) 99,000 103,000 Contribution margin $ 293,000 Less fixed expenses: $ 122,000 Fixed manufacturing overhead Fixed operating expenses (selling and administrative) 88,000 $ 83,000 Operating income (loss) Print Done Requirements 1. Prepare an incremental analysis to determine whether Nautical should accept this special sales order. 2. Identify long-term factors Nautical should consider in deciding whether to accept the special sales order. Print Done 0 Nautical manufactures flotation vests in Orlando, Florida. Nautical's contribution margin Income statement for the most recent month contains the following data: (Click the icon to view the cost information.) Suppose Optimum Cruiselines wants to buy 5,800 vests from Nautical. Acceptance of the order will not increase Nautical's variable marketing and administrative expenses or any of its fixed expenses. The Nautical plant has enough unused capacity to manufacture the additional vests. Optimum Cruiselines has offered $11 per vest, which below the normal sale price of $15. Read the requirements. Requirement 1. Prepare an incremental analysis to determine whether Nautical should accept this special sales order. (Enter a "O" for any zero balances. Use parentheses or a minus sign to indicate a negative contribution margin and/or a decrease in operating income from the special order.) Total Order Per Unit (5,800 units) Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease operating income from the special order Decision: Requirem should consider in deciding whether to accept the special sales order. on operating profits, Nautical's managers also should consider the following: Accept the special sales order. Reject the special sales order. In addition Enter any number in the edit fields and then continue to the next question. Requirement 2. Identify long-term factors Nautical should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Nautical's managers also should consider the following: A. How will Nautical's competitors react? Will they retaliate by cutting their prices and starting a price war? B. Will Nautical's other customers find out about the lower sale price Nautical accepted from Optimum? If so, will these other customers demand lower sale prices? C. Will lowering the sale price tarnish Nautical's image as a quality brand? D. All of the above. E. None of the above. Enter any number in the edit fields and then continue to the next question. ? Data Table Nautical Contribution Margin Income Statement (Variable Costing) For Sales Volume of 33,000 Units Total Sales revenue $ 495,000 Less variable expenses: Variable manufacturing costs (DM, DL, Variable MOH) Variable operating expenses (selling and administrative) 99,000 103,000 Contribution margin $ 293,000 Less fixed expenses: $ 122,000 Fixed manufacturing overhead Fixed operating expenses (selling and administrative) 88,000 $ 83,000 Operating income (loss) Print Done Requirements 1. Prepare an incremental analysis to determine whether Nautical should accept this special sales order. 2. Identify long-term factors Nautical should consider in deciding whether to accept the special sales order. Print Done

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

IT Audit Control And Security

Authors: Robert R. Moeller

1st Edition

0471406767, 9780471406761

More Books

Students also viewed these Accounting questions

Question

manageremployee relationship deteriorating over time;

Answered: 1 week ago