Requirement 2. Prepare a differential analysis to determine whether Safe Sailing should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.)

Safe Sailing manufactures flotation vests in Charleston, South Carolina. Safe Sailing's contribution margin income statement for the month ended May 31, 2018, contains the following data: E (Click the icon to view the cost information.) Suppose Overtown wishes to buy 4,100 vests from Safe Sailing. Safe Sailing will not incur any variable selling and administrative expenses on the special order. The Safe Sailing plant has enough unused capacity to manufacture the additional vests. Overtown has offered $4 per vest, which is below the normal sales price of $14. Read the requirements. Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Safe Sailing's decision. Variable Manufacturing Costs relevant Variable Selling and Administrative Costs irrelevant Fixed Manufacturing Costs irrelevant Fixed Selling and Administrative Costs irrelevant Requirement 2. Prepare a differential analysis to determine whether Safe Sailing should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) Expected increase in revenue Expected increase in variable manufacturing costs Expected increase in operating income TULIIC TIVTILITLIUCU ITIOy VI, LUI Sales in Units 29,000 406,000 Net Sales Revenue $ Variable Costs: 1. Identify each cost in the income statement as either relevant or irrelevant to Safe Sailing's decision. 2. Prepare a differential analysis to determine whether Safe Sailing should accept this special sales order. 3. Identify long-term factors Safe Sailing should consider in deciding whether to accept the special sales order. Manufacturing 87,000 106,000 Selling and Administrative 193,000 Print Done 213,000 Total Variable Costs Contribution Margin Fixed Costs: Manufacturing 121,000 89,000 Selling and Administrative 210,000 Total Fixed Costs $ 3,000 Operating Income