Summer Fun manufactures flotation vests in Charleston, South Carolina. Summer Fun's

contribution margin income statement for the month ended March 31, 2016, contains the following data:

		Summer Fun
		Income Statement
		For the Month Ended March 31, 2016

	Sales in Units	42,000
	Sales Revenue	$588,000
	Variable Costs:
	Manufacturing	210,000
	Selling and Administrative	106,000
	Total Variable Costs	316,000
	Contribution Margin	272,000
	Fixed Costs:
	Manufacturing	127,000
	Selling and Administrative	92,000
	Total Fixed Costs	219,000
	Operating Income	$53,000

Suppose Rafter wishes to buy 4,200 vests from Summer FunSummer Fun. summer fun will not incur any variable selling and administrative expenses on the special order. The

Summer FunSummer Fun plant has enough unused capacity to manufacture the additional vests. Rafter

has offered $10 per vest, which is below the normal sales price of $14.

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.

	dentify long-term factors Summer Fun should consider in deciding whether to accept the special sales order.