Nautical manulactures flotation vests in San Diego, Califomia. Nautical's contribution margin income statement for the most recent month contains the following dataIIB (Click the ioon to view the cost informaticn.) Suppose Ovenon Cruiselines wants to buy 5,100 vests from Nautical. Acceptance of the order wil not require any variable seling and administrative expenses. The special order wil not affect fixsed expenses. The Nautical plant has enough unused capacity to manulacture the additional vests. Overton Cruiselines has offered $4 per vist which is below the normat sale price of \$14. Read the teguirements- Requirement 1. Prepare an incremental analysis to determine whether Nautical should accept this special sales order. (Enter a "Or for any zero balances. Use parentheses or a minus sga to indicate a negative contribution margin andior a decrease in operating income from the special order.) Decision: Requirement 2. Identify long term factors Navical should consider in deciding whether to accept the special sales onder. In addition to detemining the speciai order's eflect on operating profits, Nauticars managers also should contider the following A. Wal Nathicars other customers find out about ehe lower sale peice Nauscal accepted from Overton? If so, wil enese other cumbomers demand lower sale prices? 6. How will Nautical's compeliors react? Wil they retaliale by cutting their prices and atarting a price war? c. Wal lowenng the sale price tamish Navticar's image as a quality brand? Nautical manufactures flotation vests in San Diego, Califorria. Nautical's contributlon margin income statoment for the most recent month cortains the following data: FHH (Click the icon to view the cost information) Suppose Ovorton Crulselines wants to buy 5,100 vests from Nautical. Acceptance of the order wil not require any variable selling and administrative expenses. The special order will not atfect frod expenses. The Nautical plant has encugh unused capachy to manutacture the additional vosts. Overton Cruiselines has offered $4 per wist, which is beiow the nermal sale price of $14. Read the requirements. Requirement 2. Identify long-term tactors Nautical should consider in deciding whether to accept the special saies order. In addition to determining the special ceders effect on operating peofits, Nasicars managers also should consider the following: A. We Nauticals other customers find out about the lower sale price Nautical accepted from Overtan? If so, will these other customers demand lower sale pnces? 8. How will Nautical's compettors react? Wal they retaliate by cutting their prices and starting a price war? C. Wal lowering the sale peice taenish Nauticais image as a qually brand? D. All of the above. E. None of the above. Data table
