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Ashford Sunglasses sell for about $152 per pair. Suppose that the company incurs the following average costs per pair EEB (Click the icon to view
Ashford Sunglasses sell for about $152 per pair. Suppose that the company incurs the following average costs per pair EEB (Click the icon to view the cost information.) Ashford has enough idle capacity to accept a one-time-only special order from Nevada Shades for 21,000 pairs of sunglasses at $81 per pair. Ashford will not incur any variable selling expenses for the order. Read the requirements Requirement 1. How would acceptng the order 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? Prepare the analysis to determine the effect on operating income. (Enter decreases to profits with a parentheses or minus sign) sunglasses x Expected increase in revenues Expected increase in expenses Expectedin sunglasses x in 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? A. Will Ashford's other customers find out about the lower sale price Ashford offered to Nevada Shades? If so, will these other customers demand lower sale prices? B. How will Ashford's competitors react? Will they retaliate by cutting their prices and starting a price war? OC. Will lowering the sale price tarnish Ashford's image as a high-quality brand? D. All of the above
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