Marine Supply manufactures flotation vests in Chattanooga, Tennessee. Marine Supply's contribution margin income statement for the most recent month contains the following data:

Suppose Overton Cruiselines wants to buy 4,900 vests from Marine Supply. Acceptance of the order will not increase Marine Supply's variable marketing and administrative expenses or any of its fixed expenses. The Marine Supply plant has enough unused capacity to manufacture the additional vests. Overton Cruiselines has offered $ 11 per vest, which is below the normal sale price of $ 15.

Requirements
1. Prepare an incremental analysis to determine whether Marine Supply should accept this special sales order.
2. Identify long- term factors Marine Supply should consider in deciding whether to ­accept the special salesorder.

Transcribed Image Text:

Marine Supply Contribution Margin Income Statement (Variable Costing) For Sales Volume of 30,000 Units 2 4 Per unit 450,000 6 Sales revenue 7 Less variable expenses: 8 Variable manufacturing costs (DM, DL Variable MOH) 210000 9 Variable operating expenses (selling and administrative)105000 10 Contribution margin 11 Less fbxed expenses: 12Fxed manufacturing overhead 13 Fxed operating expenses (selling and administrative 14 Operating income (lass) 15 121000