Summer Fun manufactures flotation vests in Philadelphia, Pennsylvania. Summer Fun’s contribution margin income statement for the most recent month contains the following data:

Suppose Sparkle Cruiselines wishes to buy 4,600 vests from Summer Fun.
Acceptance of the order will not require any variable selling and administrative expenses.
The special order will not affect fixed expenses. The Summer Fun plant has enough unused capacity to manufacture the additional vests. Sparkle Cruiselines has offered \($6\) per vest, which is below the normal sales price of \($14\).

Requirements:

1. Prepare an incremental analysis to determine whether Summer Fun should accept this special sales order.
2. Identify long-term factors that Summer Fun should consider in deciding whether to accept the special sales order.

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B C D 1 2 3 Summer Fun Contribution Margin Income Statement (Variable Costing) For Sales Volume of 33,000 Units 4 5 Total 6 Sales revenue $ 462,000 7 Less variable expenses: 8 Variable manufacturing costs (DM, DL, Variable MOH) 99,000 9 Variable operating expenses (selling and administrative) 111,000 10 Contribution margin $ 252,000 11 Less fixed expenses: 12 Fixed manufacturing overhead 122,000 13 Fixed operating expenses (selling and administrative) 93,000 14 Operating income (loss) $ 37,000 15