Hilton Kyler Sunglasses sell for about $151 per pair. Suppose the company incurs the following average costs per pair: (Click the icon to view the cost information.) Hilton Kyler has enough idle capacity to accept a one-time-only special order from Alaska Glasses for 20,000 pairs of sunglasses at $72 per pair. Hilton Kyler will not incur any variable marketing expenses for the order. Read the requirements. Requirement 1. How would accepting the order affect Hilton Kyler's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Hilton Kyler's managers consider in deciding whether to accept the order? Prepare an incremental analysis to determine the special order's effect on operating income. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.) Total Order Incremental Analysis of Special Sales Order Decision Per Unit (20,000 units) Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Data table X Requirements Direct materials . $ 38 1. How would accepting the order affect Hilton Kyler's operating income? In addition to the Direct labor. . . . . 11 special order's effect on profits, what other (longer-term qualitative) factors should Hilton Kyler's Variable manufacturing overhead . . . . . . . . 9 managers consider in deciding whether to accept the order? Variable marketing expenses. . . . . . . . . . . . 4 2. Hilton Kyler's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $72 is less than Hilton Kyler's $82 cost to make the sunglasses. Revo asks you, 20* Fixed manufacturing overhead . . . . . . . . . . as one of Hilton Kyler's staff accountants, to explain whether his analysis is correct $ 82 Total cost . . . . . . * $2,200,000 total fixed manufacturing overhead : 110,000 pairs of sunglasses