Hudson Bay Co. manufactures floatation vests in Norfolk, Virginia. Hudson Bay's contribution margin income statement for the most recent month contains the following data:

Sales in units 31,000

Sales in revenue $434,000

Variable expenses:

Manufacturing $186,000

Marketing and administrative 110,000

Total variable expenses 296,000

Contribution margin 138,000

Fixed expenses:

Manufacturing 130,000

Marketing and administrative 92,000

Total fixed expenses 222,000

Operating income (loss) $(84,000)

Suppose Craft Boats wishes to buy 4,600 vests from Hudson Bay. Acceptance of the order will not increase Hudson Bay 's variable marketing and administrative expenses. The Hudson Bay plant has enough unused capacity to manufacture the additional vests. Craft Boats has offered $8 per vest, which is below the normal sale price of $14.

Required:

a) Determine whether Hudson Bay should accept this special sales order.

b) Identify long-term factors Hudson Bay should consider in deciding whether to accept the special sales order.