Marine Supply manufactures flotation vests in Tampa, Florida. Marine Supply's contribution margin income statement for the most recent month contains the following data: (Click the icon to view the cost information.) Suppose Overlook Cruiselines wants to buy 5,500 vests from Marine Supply. Acceptance of the order will not require any variable selling and administrative expenses. The special order will not affect fixed expenses. The Marine Supply plant has enough unused capacity to manufacture the additional vests. Overlook Cruiselines has offered $7 per vest, which is below the normal sale price of $14. Read the requirements. Requirement 1. Prepare an incremental analysis to determine whether Marine Supply should accept this special sales order. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a negative contribution margin and/or a decrease in operating income from the special order.) Total Order Incremental Analysis of Special Sales Order Decision Per Unit (5,500 units) Data table Revenue from special order Less variable expense associated with the order: A B Variable manufacturing costs 1 Marine Supply Contribution margin 2 Contribution Margin Income Statement (Variable Costing) Less: Additional fixed expenses associated with the order 3 For Sales Volume of 32,000 Units Increase (decrease) in operating income from the special order 4 Total Decision: 5 Sales revenue $ 448,000 6 Less variable expenses Requirement 2. Identify long-term factors Marine Supply should consider in deciding whether to accept the special sales order. 7 Variable manufacturing costs (DM, DL, Variable MOH) 160,000 In addition to determining the special order's effect on operating profits, Marine Supply's managers also should consider the following: 8 Variable operating expenses (selling and administrative) 104,000 9 Contribution margin $ 184,000 O A. How will Marine Supply's competitors react? Will they retaliate by cutting their prices and starting a price war? O B. Will Marine Supply's other customers find out about the lower sale price Marine Supply accepted from Overlook? If so, will these other customers demand lower sale prices? O C. Will lowering the sale price tarnish Marine Supply's image as a quality brand? 10 Less fixed expenses: $ 130.000 O D. All of the above. 11 Fixed manufacturing overhead 12 Fixed operating expenses (selling and administrative) 13 Operating income (loss) 86,000 O E. None of the above. $ (32,000) Print Done