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PLEASE SHOW WORK! Safe Sailing manufactures flotation vests in Newark, New Jersey. Safe Sailing's contribution margin income statement for the most recent month contains the

PLEASE SHOW WORK!image text in transcribed

Safe Sailing manufactures flotation vests in Newark, New Jersey. Safe Sailing's contribution margin income statement for the most recent month contains the following data: (Click the icon to view the cost information.) Suppose Overlook Cruiselines 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 Cruiselines has offered $7 per vest, which is below the normal sale price of $16. Read the requirements. Requirement 1. Prepare an incremental analysis to determine whether Safe Sailing should accept this special sales order. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a negative contribution margin and/or a decrease in operating income from the special order.) Total Order Data Table Incremental Analysis of Special Sales Order Decision Per Unit (4,500 units) Revenue from special order $ 7.00 $ 31,500 Contribution Margin Income Statement (Variable Costing) Less variable expense associated with the order: For Sales Volume of 31,000 Units Variable manufacturing costs Total Contribution margin Sales revenue 496,000 Less: Additional fixed expenses associated with the order Less variable expenses: Increase (decrease) in operating income from the special order Variable manufacturing costs (DM, DL, Variable MOH) 93,000 106,000 Variable operating expenses (selling and administrative) A Requirements Contribution margin 297,000 Less fixed expenses: Fixed manufacturing overhead 126,000 1. Prepare an incremental analysis to determine whether Safe Sailing should accept this Fixed operating expenses (selling and administrative) 86,000 special sales order. 85,000 2. Identify long-term factors Safe Sailing should consider in deciding whether to accept the Operating income (loss) Clear All special sales order

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