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Sea Blue manufactures flotation vests in Charleston, South Carolina. Sea Blue's contribution margin income statement for the month ended December 31, 2018, contains the following
Sea Blue manufactures flotation vests in Charleston, South Carolina. Sea Blue's contribution margin income statement for the month ended December 31, 2018, contains the following data: (Click the icon to view the cost information.) Suppose Overboard wishes to buy 4,600 vests from Sea Blue Sea Blue will not incur any variable selling and administrative expenses on the special order. The Sea Blue plant has enough unused capacity to manufacture the additional vests. Overboard has offered $15 per vest, which is below the normal sales price of $19. Read the requirements. i Data Table Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision. Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Sea Blue Income Statement For the Month Ended December 31, 2018 Fixed Selling and Administrative Costs Sales in Units 32.000 608,000 S i Net Sales Revenue Variable Costs: Manufacturing Requirements - X 96,000 108.000 Selling and Administrative 204,000 404,000 1. Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision. 2. Prepare a differential analysis to determine whether Sea Blue should accopt this special sales order. 3. Identify long-term factors Sea Blue should consider in deciding whether to accept the special sales order. Total Variable Costs Contribution Margin Fixed Costs: Manufacturing Selling and Administrative 124.000 94.000 218.000 Total Fixed Costs Print Done S 186,000 Operating Income
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