Summer Fun manufactures flotation vests in Charleston, South Carolina. Summer Fun's contribution margin income statement for the month ended October 31, 2024, contains the following data: Click the icon to view the cost information.) Suppose Overtown wishes to buy 3,900 vests from Summer Fun. Summer Fun will not incur any variable selling and administrative expenses on the special order. The Summer Fun plant has enough unused capacity to manufacture the additional vests. Overtown has offered $14 per vest, which is below the normal sales price of $18. Read the requirements Variable Manufacturing Costs Variable Selling and Administrative Costs 7 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.) 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. How will Summer Fun's competitors react? Will they retaliate by cutting their prices and starting a price war? OB. Will Summer Fun's other customers find out about the lower sale price Summer Fun accepted from Overtown? If so, will these other customers demand lower sale prices? OC. Will the special order customer come back again and again, asking for the same reduced price? OD. All of the above O E. None of the above - mer Fun manufactures flotatic umer Fun's contribution margir ber 31, 2024, contains the foll (Click the icon to view the cos Data table vests from Summer Fun. Summer Fun ministrative expenses on the special gh unused capacity to manufacture the $14 per vest, which is below the normal the requirements. Summer Fun Income Statement For the Month Ended October 31, 2024 able Selling and Administrative d Manufacturing Costs d Selling and Administrative Sales in Units 30,000 Net Sales Revenue $ 540,000 Variable Costs ter decreases to revenue or uirement 2. Prepare a differe ases to costs with a parenthe Manufacturing 150,000 104,000 Selling and Administrative 254,000 Total Variable Costs in operatii Contribution Margin 286,000 sion: Fixed Costs: Manufacturing uirement 3. Identify long-term 129,000 86,000 Selling and Administrative Edition to determining the sped owing: Total Fixed Costs 215,000 A. How will Summer Fun's co $ 71,000 Operating Income 3. Will Summer Fun's other lower sale prices? Vill these other customers demand olina. Summer Fun's contribution margin income statement for month ended October 31, 2024, contains the following data: (Click the icon to view the cost information.) Summer Fun will not incur any variable selling and administ expenses on the special order. The Summer Fun plant has unused capacity to manufacture the additional vests. Overto has offered $14 per vest, which is below the normal sales p $18. ad the requirements - (Enter iable Manufacturing Costs iable Selling and Administrative Costs ed Manufacturip ed Selling and Requirements quirement 2. reases to revel 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. cision: der. following: quirement 3.10 ddition to dete Print Done A. How will s B. Will Sumn other customers demand lower sale prices? C. Will the special order customer come back again and again, asking for the same reduced price? so, will thes
