Nautical manufactures flotation vests in Orlando, Florida. Nautical's contribution margin income statement for the most recent month contains the following data: E: (Click the icon to view the cost information.) Suppose Optimum Cruiselines wants to buy 4,800 vests from Nautical. Acceptance of the order will not require any variable selling and administrative expenses. The special order will not affect fixed expenses. The Nautical plant has enough unused capacity to manufacture the additional vests. Optimum Cruiselines has offered $10 per vest, which is below the normal sale price of $16. Read the requirements Data Table Requirement 1. Prepare an incremental analysis to determine whether Nautical should accept this special sales order. (Enter a "0" for any zero balances. Use from the special order.) ating income Nautical Per Unit Total Order (4,800 units) 48000 Contribution Margin Income Statement (Variable Costing) For Sales Volume of 32,000 Units 101 Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Total 24000 Sales revenue $ 512,000 5 Contribution margin 24000 0 Less: Additional fixed expenses associated with the order 160,000 110,000 24000 Increase (decrease) in operating income from the special order Less variable expenses: Variable manufacturing costs (DM, DL, Variable MOH) Variable operating expenses (selling and administrative) Contribution margin Less fixed expenses: Fixed manufacturing overhead $ 242,000 Decision: Accept the special sales order. $ Requirement 2. Identify long-term factors Nautical should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Nautical's managers also should consider the following: 124,000 93,000 Fixed operating expenses (selling and administrative) Operating income (loss) $ 25,000 O A. How will Nautical's competitors react? Will they retaliate by cutting their prices and starting a price war? INIMI---II- Print Done Enter any number in the edit fields and then continue to the next