Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Mermaid manufactures flotation vests in Charleston, South Carolina. Mermaid's contribution margin income statement for the month ended January 31, 2024, contains the following data:
Mermaid manufactures flotation vests in Charleston, South Carolina. Mermaid's contribution margin income statement for the month ended January 31, 2024, contains the following data: (Click the icon to view the cost information.) Read the requirements. Suppose Overlook wishes to buy 3,900 vests from Mermaid. Mermaid will not incur any variable selling and administrative expenses on the special order. The Mermaid plant has enough unused capacity to manufacture the additional vests. Overlook has offered $11 per vest, which is below the normal sales price of $18. Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Mermaid's decision. Data table Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs Requirements 1. Identify each cost in the income statement as either relevant or irrelevant to Mermaid's decision. 2. Prepare a differential analysis to determine whether Mermaid should accept this special sales order. 3. Identify long-term factors Mermaid should consider in deciding whether to accept the special sales order. Print Done Mermaid Income Statement For the Month Ended January 31, 2024 Sales in Units 29,000 Net Sales Revenue $ 522,000 Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income Print Done 116,000 107,000 223,000 299,000 127,000 89,000 216,000 $ 83,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started