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1. Sea Blue manufactures flotation vests in Charleston, South Carolina. Sea Blue's contribution margin income statement for the month ended December 31, 2018, contains the following data: (Click the icon to view the cost information.) Suppose Overboard wishes to buy 4,600 vests from Sea Blue. Sea Blue will not incur any variable selling and administrative expenses on the special order. The Sea Blue plant has enough unused capacity to manufacture the additional vests. Overboard has offered $15 per vest, which is below the normal sales price of $19 Read the requirements Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision. Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs relevant irrelevant irrelevant irrelevant Requirement 2. Prepare a differential analysis to determine whether Sea Blue should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) Expected increase in revenue Expected increase in variable manufacturing costs Expected increase in operating income $ 69,000 13,800 S 55,200 Decision: Accept the special order Requirement 3. Identify long-term factors Sea Blue should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Sea Blue's managers also should consider the following A. Will Sea Blue's other customers find out about the lower sale price Sea Blue accepted from Overboard? If so, will these other customers demand lower sale prices? B. Will the special order customer come back again and again, asking for the same reduced price? C. How will Sea Blue's competitors react? Will they retaliate by cutting their prices and starting a price war? D. All ofthe above E. None of the above 1: Data Table Sea Blue Income Statement For the Month Ended December 31, 2018 Sales in Units Net Sales Revenue Variable Costs: 32,000 $608,000 Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs: 96,000 108,000 204,000 404,000 Manufacturing 124,000 94,000 218,000 $186,000 Selling and Administrative Total Fixed Costs Operating Income 2: Requirements 1. Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision. 2. Prepare a differential analysis to determine whether Sea Blue should accept this special sales order. 3. Identify long-term factors Sea Blue should consider in deciding whether to accept the special sales order