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Tolman Sunglasses sell for about $158 per pair. Suppose that the company incurs the following average costs per pair EEB (Click the icon to view
Tolman Sunglasses sell for about $158 per pair. Suppose that the company incurs the following average costs per pair EEB (Click the icon to view the cost information Tolman has enough idle capacity to accept a one-time-only special order from Montana Shades for 18,000 pairs of sunglasses at $64 per pair. Tolman will not incur any variable selling expenses for the order. Read the requirements. Requirement 1. How would accepting the order affect Tolman's aperating income? In addtion to the special crder's effect on profits, what other longer-term qualitative) factors should Tolma's managers consider in deciding whether to accept the order? Prepare the analysis to deterrnine the effect on operating income. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues Expected increase in expenses Expected in operating income 1. How would accspting the order affect Tolman's operating income? In addition to the special DataTable order's effect on profits, what other (longer-term qualitative) factors should Tolman's managers consider in deciding whether to accept the order? 2. Tolman's marketing manager Peter Smith, argues against accepting the special order because the offer price of S64 is less than Tolman's $74 cost to make the sunglasses. Smith asks you, as one of Tolman's staff accountants, to explain whether his analysis is correct. What wouk you say? Direct materials Direct labor Variable manufacturing overhead Variable selling expenses Fixed manufacturing overhead Tolal cost $2,350,000 Total fioxed manufacturing overhead117,500 Pairs of sunglasses 36 10 Print Done 20. 74 PrintDone
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