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Data Table Parkland Sunglasses sell for about 5151 per pair. Suppose that the company incurs the following average costs per pair: (Click the icon to
Data Table Parkland Sunglasses sell for about 5151 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 Utah Shades for 17.000 pairs of sunglasses at $83 per pair. Parkland will not Read the requirements. Expected increase in expenses 17,000 sunglasses x $ 62(1,054,000) S 357.000 Expected increase in 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 acc Direct materials Direct labor Variable manufacturing overhead Variable selling expenses Fixed manufacturing overhead O A. How will Parkland's competitors react? Will they retaliate by cutting their prices and starting a price war? OB. Will Parkland's other customers find out about the lower sale price Parkland offered to Utah Shades? If so, will these other customers demand lower O C . Will lowering the sale price tarnish Parkland's image as a high-quality brand? D. All of the above O E. None of the above Total cost $1,950,000 Total fixed manufacturing overhead / 78,000 Pairs of sunglasses Requirement 2. Parkland's marketing manager, Peter Smith, argues against accepting the special order because the offer price of $83 is less than Parkland accountants, to explain whether his analysis is correct. What would you say? Print Done Costs that we will incur whether or not we fill the order are irrelevant to our When deciding whether to accept a special order, we should compare the revenues we will receive against the differential costs we will incur to fill the order. decision. This is why comparing the $83 price Utah Shades offered us with our $89 total cost of making the sunglasses is incorrect The additional revenues and the additional costs that we will incur to fill the special order are the Utah Shades special order, we will incur only $ of additional cost per pair, which is per pair that Utah Shades offered. Therefore, we should the special order to Operating income. if we accept than the the company's $83
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