Ashford Sunglasses sell for about $$150$ per pair. Suppose that the company incurs the following average costs per pair

$($Click the icon to view the cost information.$)$

Ashford has enough idle capacity to accept a one$-$time$-$only special order from Alaska Shades for $19,000$ pairs of sunglasses at $$84$ per pair. Ashford will not incur any variable selling expenses for the order

Read the requirements.

Prepare the analysis to determine the effect on operating income. $($Enter decreases to profits with a parentheses or minus sign.$)$

Expected increase in revenues $$ sunglasses $*$

Expected increase in expenses $$ sunglasses $$

Expected $$ in operating income $$

Data table

Requirements

How would accepting the Urder affect Ashford's operating income? In addition to the special order's effect on profits, what other $($longer$-$term qualitative$)$ factors should Ashford's managers consider in deciding whether to accept the order?

Ashford's marketing manager, Peter Cole, argues against accepting the special order because the offer price of $$84$ is less than Ashford's $$85$ cost to make the sunglasses. Cole asks you, as one of Ashford's staff accountants, to explain whether his analysis is correct. What would you say?

Direct materials

Direct labor

Variable manufacturing overhead

Variable selling expenses

Fixed manufacturing overhead

Total cost

$$2,200,000$ T$$tal fixed manufacturing overhead $/88,000$ Pairs of sunglasses

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