Aqua Fun manufactures flotation vests in Charlotte, North Carolina. Aqua Fun's contribution margin income statement for the most recent month contains the following data: (Click the icon to view the cost information.) Suppose Boat Safety Cruiselines wants to buy 4,700 vests from Aqua Fun. Acceptance of the order will not require any variable selling and administrative expenses. The special order will not affect fixed expenses. The Aqua Fun plant has enough unused capacity to manufacture the additional vests. Boat Safety Cruiselines has offered $5 per vest, which is below the normal sale price of $15. Read the requirements. Requirement 1. Prepare an incremental analysis to determine whether Aqua Fun should accept this special sales order. (Enter a "0" 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 Incremental Analysis of Special Sales Order Decision Per Unit (4,700 units) 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) in operating income from the special order Decision: Requirement 2. Identify long-term factors Aqua Fun should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Aqua Fun's managers also should consider the following: A. How will Aqua Fun's competitors react? Will they retaliate by cutting their prices and starting a price war? B. Will Aqua Fun's other customers find out about the lower sale price Aqua Fun accepted from Boat Safety? If so, will these other customers demand lower sale prices? C. Will lowering the sale price tarnish Aqua Fun's image as a quality brand? D. All of the above. E. None of the above. iData Table - A B 1 Aqua Fun 3 2 Contribution Margin Income Statement (Variable Costing) For Sales Volume of 33,000 Units 4 5 Sales revenue Total $ 495,000 6 Less variable expenses: 7 Variable manufacturing costs (DM, DL, Variable MOH) 99,000 8 Variable operating expenses (selling and administrative) 106,000 9 Contribution margin $ 290,000 10 Less fixed expenses: 11 Fixed manufacturing overhead $ 130,000 12 Fixed operating expenses (selling and administrative) 85,000 13 Operating income (loss) $ 75,000 Print Done