Data Table Direct materials Direct labor Variable manufacturing overhead 13 12 2 25 96 Variable selling expenses Fixed manufacturing overhead Total cost * $2,350,000 Total fixed manufacturing overhead /94,000 Pairs of sunglasses Print Done Parkland Sunglasses sell for about $153 per pair. Suppose that the company incurs the following average costs per pair: Click the icon to view the cost information.) Parkland has enough idle capacity to accept a one-time-only special order from Colorado Shades for 20,000 pairs of sunglasses at S93 per pair. Parkland will not incur any variable selling expenses for the order. Read the requirements. Requirement 1. How would accepting the order affect Parkland's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Parkland'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.) Expected increase in revenues sunglasses X Expected increase in expenses sunglasses x Expected in operating income In addition to the special order's effect on profits, what other (onger-term qualitative) factors should Parkland's managers consider in deciding whether to accept the order? O A. Will lowering the sale price tamish Parkland's image as a high-quality brand? O B. Will Parkland's other customers find out about the lower sale price Parkland offered to Colorado Shades? If so, will these other customers demand lower sale prices? O C. How will Parkland's competitors react? Will they retaliate by cutting their prices and starting a price war? O D. All of the above Parkland Sunglasses sell for about $153 per pair. Suppose that the company incurs the following average costs per pair Click the icon to view the cost information.) Parkland has enough idle capacity to accept a one-time-only special order from Colorado Shades for 20,000 pairs of sunglasses at $93 per pair. Parkland will not incur any variable selling expenses for the order. Read the requirements C. How will Parkland's competitors react? Will they retaliate by cutting their pnices and starting a pncew O D. All of the above 0 E. None of the above Requirement 2. Parkland's marketing manager, Peter Kyler, argues against accepting the special order because the offer price of $93 is less than Parkland's $96 cost to make the sunglasses. Kyler asks you, as one of Parkland's staff accountants, to explain whether his analysis is correct. What would you say? When deciding whether to accept a special order, we should compare the Costs that we will incur whether or not we fill the order are to our decision. This is why comparing the S93 price Colorado Shades offered us with our 96 total cost of making a sunglasses s The additional revenues and the additional costs that we will incur to fill the special order are the Colorado Shades special order, we will incur only $ per pair that Colorado Shades offered. Therefore, we should operating income. If we accept than the $93 of additional cost per pair, which is the special order to the company's
