i Data Table X Direct materials $ 44 Direct labor 9 6 Variable manufacturing overhead Variable selling expenses Fixed manufacturing overhead 3 $25* $ 87 Total cost * $2,400,000 Total fixed manufacturing overhead / 96,000 Pairs of sunglasses Print Done Ashford Sunglasses sell for about $153 per pair. Suppose that the company incurs the following average costs per pair: (Click the icon to view the cost information.) Ashford has enough idle capacity to accept a one-time-only special order from Nevada Shades for 21,000 pairs of sunglasses at $85 per pair. Ashford will not incur any variable selling expenses for the order. Read the requirements. Requirement 1. How would accepting the order affect Ashford's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Ashford'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 * Expected increase in expenses sunglasses * Expected in operating income In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Ashford's managers consider in deciding whether to accept the order? A. Will Ashford's other customers find out about the lower sale price Ashford offered to Nevada Shades? If so, will these other customers demand lower sale prices? B. Will lowering the sale price tarnish Ashford's image as a high-quality brand? C. How will Ashford's competitors react? Will they retaliate by cutting their prices and starting a price war? D. All of the above E. None of the above Requirement 2. Ashford's marketing manager, Peter Juda, argues against accepting the special order because the offer price of $85 is less than Ashford's $87 cost to make the sunglasses. Juda asks you, as one of Ashford'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 to our decision. This is why comparing the $85 price Nevada Shades offered us with our $87 total cost of making the sunglasses is If we accept than the $85 The additional revenues and the additional costs that we will incur to fill the special order are the Nevada Shades special order, we will incur only of additional cost per pair, which is per pair that Nevada Shades offered. Therefore, we should the special order to operating income. the company's