Safe Sailing manufactures flotation vests in Tampa, Florida. Safe Sailing€™s contribution margin income statement for the month ended December 31, 2012, contains the following data:

Suppose Overtown wishes to buy 3,800 vests from Safe Sailing. Acceptance of the order will not increase Safe Sailing€™s variable marketing and administrative expenses. The Safe Sailing plant has enough unused capacity to manufacture the additional vests. Overtown has offered $12.00 per vest, which is below the normal sale price of $20.00.
Requirements
1. Identify each cost in the income statement as either relevant or irrelevant to Safe Sailing€™s decision.
2. Prepare an incremental analysis to determine whether Safe Sailing should accept this special sales order.
3. Identify long-term factors Safe Sailing should consider in deciding whether to accept the special salesorder.

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SAFE SAILING Income Statement For the Month Ended December 31, 2012 Sales in units 41,000 $ 820,000 Sales revenuc Variable expenses: Manufacturing 205,000 Marketing and administrative 105,000 $ 310,000 Total variable expnses Contribution margin Fixed expenses: Manufacturing $ 510,000 126,000 Marketing and administrative 91,000 Total fixed expenses $ 217,000 $ 293,000 Operating income