i Data Table $ 43 Direct materials 14 Direct labor 8 2 Variable manufacturing overhead Variable selling expenses Fixed manufacturing overhead 20. ed $ 87 Total cost * $2,400,000 Total fixed manufacturing overhead / 120,000 Pairs of sunglasses or ta Print Done erg Requirements 1. How would accepting the order affect Oakley's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Oakley's managers consider in deciding whether to accept the order? 2. Oakley's marketing manager, Peter Stenback, argues against accepting the special order because the offer price of $84 is less than Oakley's $87 cost to make the sunglasses. Stenback asks you, as one of Oakley's staff accountants, to explain whether his analysis is correct. What would you say? Print Done Oakley Sunglasses sell for about $151 per pair. Suppose that the company incurs the following average costs per pair. Click the icon to view the cost information.) Oakley has enough idle capacity to accept a one-time-only special order from Water Shades for 18,000 pairs of sunglasses at $84 per pair. Oakley will not incur any variable selling expenses for the order. Read the requirements Requirement 1. How would accepting the order affect Oakley's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Oakley's managers consider in deciding whether to accept the order? Prepare the analysis to determine the effect on operating income. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues sunglasses x Expected increase in expenses sunglasses x Expected in operating income In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Oakley's managers consider in deciding whether to accept the le order? O A. How will Oakley's competitors react? Will they retaliate by cutting their prices and starting a price war? O B. Will lowering the sale price tarnish Oakley's image as a high-quality brand? C. Will Oakley's other customers find out about the lower sale price Oakley offered to Water Shades? If so, will these other customers demand lower sale prices? OD. All of the above O E. None of the above Requirement 2. Oakley's marketing manager, Peter Stenback, argues against accepting the special order because the offer price of $84 is less than Oakley's $87 cost to make the sunglasses, Stenback asks you, as one of Oakley's staff accountants to explain whether his analysis is correct. What would you say? When deciding whether to accept a special order, we should compare the that we will incur whether or not we fill the order are to our decision. This is why comparing the $84 price Water Shades offered us with our $87 total cost of making the sunglasses is Costs le es The additional revenues and the additional costs that we will incur to fill the special order are the Water Shades special order, we will incur only $ of additional cost per pair, which is per pair that Water Shades offered. Therefore, we should the special order to operating income If we accept than the $84 the company's e sce Requirement 2. Oakley's marketing manager, Peter Stenback, argues against accepting the special order because the offer price of $84 is less than Oakley's $87 cost esc to make the sunglasses. Stenback asks you, as one of Oakley's staff accountants, to explain whether his analysis is correct. What would you say? When deciding whether to accept a special order, we should compare the Costs esco that we will incur whether or not we fill the order are to our dec making the sunglasses is revenues we will receive against the differential costs prior to filling the order. escor revenues we will receive against the differential costs we will incur to fill the order. The additional revenues and the additional costs that we will incur to fill the revenues prior to Siling the order against the extra costs we will incur to fill the order the Water Shades special order, we will incur only $ le score per pair that Water Shades offered. Therefore, we should the special order to the company's operating income Requirement 2. Oakley's marketing manager, Peter Stenback, argues against accepting the special order because the offer price of $84 is less than Oakley's $87 cost to make the sunglasses. Stenback asks you, as one of Oakley's staff accountants, to explain whether his analysis is correct. What would you say? When deciding whether to accept a special order, we should compare the Costs that we will incur whether or not we fill the order are V to our decision. This is why comparing the $84 price Water Shades offered us with our $87 total cost of making the sunglasses is irrelevant The additional revenues and the additional costs tha the special order are If we accept relevant the Water Shades special order, we will incur only $ of additional cost per pair, which is than the $84 per pair that Water Shades offered. Therefore, we should the special order to the company's operating income esc le le sc Requirement 2. Oakley's marketing manager, Peter Stenback, argues against accepting the special order because the offer price of $84 is less than Oakley's $87 cost to make the sunglasses. Stenback asks you, as one of Oakley's staff accountants, to explain whether his analysis is correct. What would you say? When deciding whether to accept a special order, we should compare the Costs that we will incur whether or not we fill the order are V to our decision. This is why comparing the $84 price Water Shades offered us with our $87 total cost of making the sunglasses is esco correct The additional revenues a the Water Shades special per pair that Water Shade. operating income le scor osts that we will incur to fill the special order are r only $ of additional cost per pair, which is e, we should the special order to If we accept than the $84 the company's incorrect