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Summer Fun manufactures flotation vests in Tampa, FL. Summer Funs contribution margin income statement for the month ended December 31, 2016, contains the following data.

Summer Fun manufactures flotation vests in Tampa, FL. Summer Funs contribution margin income statement for the month ended December 31, 2016, contains the following data.

Summer Fun
Income Statement
For the month ended December 31, 2021
Sales in units 3,100
Sales Revenues $ 465,000
Variable Costs:
Manufacturing 93,000
Selling and Administration 111,000
Total Variable Costs 204,000
Contribution Margin 261,000
Fixed Costs:
Manufacturing 121,000
Selling and Administration 86,000
Total Fixed Costs 207,000
Operating Income $ 54,000

Suppose Overtown wishes to buy 4,700 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 to pay $10 per vest, which is below the normal sale price of $15.

Requirements

  1. Determine whether Summer Fun should accept this special order. Show your calcula

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