Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Tint Sunglasses sell for about $170 per pair. Suppose the company incurs the following average costs per pair: E: (Click the icon to view the
Tint Sunglasses sell for about $170 per pair. Suppose the company incurs the following average costs per pair: E: (Click the icon to view the cost information.) Tint has enough idle capacity to accept a one-time-only special order from Master Glasses for 21,000 pairs of sunglasses at $69 per pair. Tint will not incur any variable marketing expenses for the order. Requirements Requirement 1. How would accepting the order affect Tint's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Tint's managers consider in deciding whether to accept the order? Prepare the analysis to determine the effect on operating income. (Enter a zero, "0", in an input box if there no expected change in the expense. Use parentheses or a minus sign for an expected decrease in operating income.) Tint Data Table Incremental Analysis of Special Sales Order Expected increase in revenues Direct materials $ 38 Expected increase in expenses: Variable manufacturing cost Direct labour 17 12 Fixed manufacturing costs Variable manufacturing overhead Variable marketing expenses 4. Total expected increase in expenses 10 Fixed manufacturing overhead Expected increase (decrease) in operating income $ 81 Total.cost. In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Tint's managers consider in deciding whether to accept the order? In addition to determining the special order's effect on operating profits, Tint's managers also should consider the following: (Select all that apply.) * $2,100,000 total fixed manufacturing overhead / 210,000 pairs of sunglasses A. Will Tint's other customers find out about the lower sale price Tint offered to Master Glasses? If so, will these other customers demand lower sale prices? B. Will lowering the sale price tarnish Tint's image as a high-quality brand? C. How will Tint's competitors react? Will they retaliate by cutting their prices and starting a price war? D. When should the equipment used to produce sunglasses be refurbished and at what cost? Print Done
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started