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Need requirement 1 please. Safe Sailing manufactures flotation vests in Calgary. Safe Sailing's contribution margin income statement for the most recent month contains the following
Need requirement 1 please.
Safe Sailing manufactures flotation vests in Calgary. Safe Sailing's contribution margin income statement for the most recent month contains the following data: (Click the icon to view the income statement.) Suppose Overlook's wants to buy 4,500 vests from Safe Sailing. Acceptance of the order will not increase Safe Sailing's variable marketing and administrative expenses or any of its fixed expenses. The Safe Sailing plant has enough unused capacity to manufacture the additional vests. Overlook's has offered $12 per vest, which is below the normal sale price of $15. Requirements 1. Prepare an incremental analysis to determine whether Safe Sailing should accept this special sales order. 2. Identify long-term factors Safe Sailing should consider in deciding whether to accept the special sales order. Requirement 1. Prepare an incremental analysis to determine whether Safe Sailing should accept this special sales order. (Use parentheses or a minus sign to enter a decrease in operating income.) Safe Sailing Incremental Analysis of Special Sales Order Expected increase in revenue Expected increase in expenses Expected increase (decrease) in operating income i Income statement Sales in units 29,000 435,000 $ Sales revenue .......... Variable expenses: Manufacturing ............ $ Marketing and administrative ... Total variable expenses 87,000 112,000 199,000 236,000 Contribution margin Fixed expenses: Manufacturing 121,000 87,000 Marketing and administrative Total fixed expenses 208,000 28,000 $ Operating income (loss)Step by Step Solution
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