How would accepting the order affect ArthurArthur Root'sRoot's operating? income?

Arthur Root Sunglasses sell for about $152 per pair. Suppose the company incurs the following average costs per pair: (Click the icon to view the cost information.) Arthur Root has enough idle capacity to accept a one-time-only special order from Washington Glasses for 21 ,000 pairs of sunglasses at $79 per pair. Arthur Root will not incur any variable marketing expenses for the order. Read the requirements. Requirement 1. How would accepting the order affect Arthur Root's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Arthur Root'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 Per Unit (21 ,OOO units) Incremental Analysis of Special Sales Order Decision 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 O Data Table Direct materials Direct labor Variable manufacturing overhead Variable marketing expenses Fixed manufacturing overhead Total cost 50 13 9 2 94 In addition to determining the special order's effect on operating profits, Root's managers also should consider the following: * $2,300,000 total fixed manufacturing overhead / 115,000 pairs of sunglasses O B. O C. o D. O E. Will Arthur Root's other customers find out about the lower sale price Arthur Root offered to Washington Glasses? If so, will these other customers demand lower sale prices? How will Arthur Root's competitors react? Will they retaliate by cutting their prices and staffing a price war? Will lowering the sale price tarnish Arthur Root's image as a high-quality brand? All of the above None of the above Print Done Requirement 2. Arthur Root's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $79 is less than Arthur Root's $94 cost to make the sunglasses. Revo asks you, as one of Arthur Root's staff accountants, to explain whether his analysis is correct When deciding whether to accept a special order, we should compare the extra revenues we will receive against the Washington Glasses offered us with our $94 total cost of making and selling the sunglasses is Costs that we will incur whether or not we fill the order are to our decisiom This is why comparing the $79 price