Summer Fun manufactures flotation vests in Atlanta, Georgia. Summer Fun's contribution margin income statement for the most

Question:

Summer Fun manufactures flotation vests in Atlanta, Georgia. Summer Fun's income statement for the most recent month contains the following data:
Sales in units. . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,000
Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $496,000
Variable expenses:
Manufacturing . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 93,000
Marketing and administrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,000
Total variable expenses . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197,000
. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $299,000
Fixed expenses:
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,000
Marketing and administrative. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,000
Total fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. $217,000
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . $ 82,000
Suppose Luxury Cruiselines wants to buy 5,700 vests from Summer Fun. Acceptance of the order will not increase Summer Fun's variable marketing and administrative expenses or any of its fixed expenses. The Summer Fun plant has enough unused capacity to manufacture the additional vests. Luxury Cruiseline has offered $10 per vest, which is below the normal sale price of $16.
Requirements
1. Prepare an incremental analysis to determine whether Summer Fun should accept this special sales order.
2. Identify long-term factors Summer Fun should consider in deciding whether to accept the special sales order.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...