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Mermaid manufactures flotation vests in Charleston, South Carolina, Mermaid's contribution margin income statement for the month ended May 31, 2024, contains the following data: (Click
Mermaid manufactures flotation vests in Charleston, South Carolina, Mermaid's contribution margin income statement for the month ended May 31, 2024, contains the following data: (Click the icon to view the cost information) Read the requirements Suppose Water Works wishes to buy 3,800 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. Water Works has offered $11 per vest, which is below the normal sales price of $15 Requirement 1, Identity each cost in the income statement as either relevant or irrelevant to Mermaid's decision Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs Requirement 2. Prepare a differential analysis to determine whether Mermaid should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) in operating income Decision: Requirement 3. Identify long-term factors Mermaid should consider in deciding whether to accept the special sales order In addition to determining the special order's effect on operating profits, Mermaid's managers also should consider the following: Choose from any list or enter any number in the input fields and then continue to the next question Read the 13 Requirement 2. Prepare a differential analysis to determine whether Mormaid should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign) 13 iple 13 in operating income Decision: 3 iple 11 Requirement 3. Identify long-term factors Mermaid should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Mermaid's managers also should consider the following A. Will Mermaid's other customers find out about the lower sale price Mermaid acopted from Water Worku? If so, will there other customers demand lower tale prices? OB. How will Mermaid's competitors react? Will they retaliate by cutting their prices and starting a price war? C. Will the special order customer come back again and again, asking for the same reduced price? OD. All of the above O E. None of the above Choose from any list or enter any number in the input fields and then continue to the next question, Next Mermaid Income Statement For the Month Ended May 31, 2024 Sales in Units 29,000 $ Net Sales Revenue 435,000 Variable Costs: Manufacturing 87,000 104,000 Selling and Administrative 191,000 Total Variable Costs Contribution Margin 244,000 Fixed Costs: Manufacturing 125,000 88,000 Selling and Administrative Total Fixed Costs 213,000 $ 31,000 Operating Income
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