Summer Fun manufactures flotation vests in Charleston, South Carolina. Summer Fun's contribution margin income statement Suppose Overboard wishes to buy 3,800 vests from Summer Fun. Summer Fun will not incur any variable selling and for the month ended March 31, 2018, contains the following data: administrative expenses on the special order. The Summer Fun plant has enough unused capacity to manufacture the B (Click the icon to view the cost information.) additional vests. Overboard has offered $12 per vest, which is below the normal sales price of $16. Read the requirements. Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Summer Fun's decision. Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs Requirement 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) v in operating income Decision: Requirement 3. Identify long-term factors Summer Fun should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Summer Fun's managers also should consider the following: O A. Will Summer Fun's other customers find out about the lower sale price Summer Fun accepted from Overboard? If so, will these other customers demand lower sale prices? O B. How will Summer Fun's competitors react? Will they retaliate by cutting their prices and starting a price war? O C. Will the special order customer come back again and again, asking for the same reduced price? O D. All of the above O E. None of the above Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Summer Fun's decision. Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs irrelevant relevant Fixed Selling and Administrative Costs Requirement 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) Expected decrease in revenue Expected increase in revenue Decision: Requirement 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) Expected decrease in fixed manufacturing costs De Expected decrease in selling and administrative costs Expected decrease in variable manufacturing costs RO Expected increase in fixed manufacturing costs ler in deciding whether to accept the special sales order. In Expected increase in selling and administrative costs 3, Summer Fun's managers also should consider the following: Expected increase in variable manufacturing costs VVIII QUITITIEI IUITS EI LUSIUNTIETO vul avuut uIE IUei sale price Summer Fun accepted from Overboard? If so, will these other customers demand lower sale prices? Requirement 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) v in operating income De Expected increase Expected decrease RE ler in deciding whether to accept the special sales order. Requirement 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign.) v in operating income Decision: Requirem Fun should consider in deciding whether to accept the special sales order. Accept the special order In addition on operating profits, Summer Fun's managers also should consider the following: Do not accept the special order O A. Will ou III UITS ULTI CUSIUITIT mu uut about the lower sale price Summer Fun accepted from Overboard? If so, will these other customers demand lower sale prices? X Data Table Summer Fun Income Statement For the Month Ended March 31, 2018 Sales in Units 33,000 Net Sales Revenue $ 528,000 Variable Costs: Manufacturing 99,000 112,000 Selling and Administrative Total Variable Costs 211,000 Contribution Margin 317,000 Fixed Costs: Manufacturing 123,000 90,000 Selling and Administrative Total Fixed Costs 213,000 $ $ 104,000 Operating Income Print Done i Requirements 1. Identify each cost in the income statement as either relevant or irrelevant to Summer Fun's decision. 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. 3. Identify long-term factors Summer Fun should consider in deciding whether to accept the special sales order. Print Done