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P8-49A Special order decision and considerations (Learning Objective 3,) Coastal Safety manufactures flotation vests in Miami, Florida. Coastal Safety's contribution margin income statement for the
P8-49A Special order decision and considerations (Learning Objective 3,) Coastal Safety manufactures flotation vests in Miami, Florida. Coastal Safety's contribution margin income statement for the most recent month contains the following data: Coastal Safety ribution Margin Income Statement (Variable For Sales Volume of 32,000 Units Per unit - 5 6 Sales revenue 7 Less variable expenses: 81 Variable manufacturingcosts (DM,DLManableMOH). 160,000 9 Variable operating expenses (selling and administrative)112.000 10 Contribution margin 11 Less fixed expenses 12 Fixed manufacturing overhead 13 Fixed operating expenses (selling and administrative)91000 126,000 14 Operating income lass 5 9,000) 15 Suppose Dazzle Cruiselines wants to buy 4,600 vests from Coastal Safety. Acceptance of the order will not require any variable selling and administrative expenses. The special order will not affect fixed expenses. The Coastal Safety plant has enough unused capacity to manufacture the additional vests. Dazzle Cruiselines has offered $7 per vest, which is below the normal sale price of $15. Requirements 1. Prepare an incremental analysis to determine whether Coastal Safety should accept this special sales order. 2. Identify long-term factors that Coastal Safety should consider in deciding whether to accept the special sales order
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