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Sylvan Cole Sunglasses sell for about $125 per pair. Suppose the company incurs the following average costs per pair: (Click the icon to view
Sylvan Cole Sunglasses sell for about $125 per pair. Suppose the company incurs the following average costs per pair: (Click the icon to view the cost information.) Sylvan Cole has enough idle capacity to accept a one-time-only special order from Water Glasses for 17,000 pairs of sunglasses at $98 per pair. Sylvan Cole will not incur any variable marketing expenses for the order. Read the requirements. Requirement 1. How would accepting the order affect Sylvan Cole's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Sylvan Cole's managers consider in deciding whether to accept the order? The increase (decrease) in operating income from the special order is $ Data table Direct materials. Direct labor... Variable manufacturing overhead. Variable marketing expenses Fixed manufacturing overhead. Total cost... 60 12 10 3 25 $ 110 * $2,200,000 total fixed manufacturing overhead / 88,000 pairs of sunglasses Print Done Requirements 1. How would accepting the order affect Sylvan Cole's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Sylvan Cole's managers consider in deciding whether to accept the order? 2. Sylvan Cole's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $98 is less than Sylvan Cole's $110 cost to make the sunglasses. Revo asks you, as one of Sylvan Cole's staff accountants, to explain whether his analysis is correct. Print Done -
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