Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Deep Blue manufactures floatation vests in Charleston, South Carolina. Deep Blue's contribution margin income statement for the most recent month contains the following data: Sales
Deep Blue manufactures floatation vests in Charleston, South Carolina. Deep Blue's contribution margin income statement for the most recent month contains the following data: Sales in units 31.000 $434,000 Sales in revenue Variable expenses: Manufacturing Marketing and administrative Total variable expenses Contribution margin Fixed expenses: $186,000 110,000 296.000 138,000 Marketing and administrative Total fixed expenses Operating income (loss) 130,000 92.000 222.000 84.000 Suppose Boats-n-More wishes to buy 6,000 vests from Deep Blue. Acceptance of the order will not increase Deep Blue's variable marketing and administrative expenses. The Deep Blue plant has enough unused capacity to manufacture the additional vests. Boats-n-More has offered S8 per vest, which is below the normal sale price of S14 Required: a) Determine whether Deep Blue should accept this special sales order b) Identify long-term factors Deep Blue should consider in deciding whether to accept the special sales order
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started