B 1 2 Safe Sailing Contribution Margin Income Statement (Variable Costing) For Sales Volume of 29,000 Units 3 Total 4 $ 406,000 5 Sales revenue 6 Less variable expenses: 116,000 106,000 OD 8 9 $ 184,000 7 Variable manufacturing costs (DM, DL, Variable MOH) Variable operating expenses (selling and administrative) 9 Contribution margin 10 Less fixed expenses: 11 Fixed manufacturing overhad 12 Fixed operating expenses (selling and administrative) 13 Operating income (loss) $ 125,000 94,000 (35,000) $ Safe Sailing manufactures flotation vests in Chattanooga, Tennessee. Safe Saling's contribution margin income statement for the most recent month contains the following data: (Click the icon to view the cost information) Suppose Water Fun Cruiselines wants to buy 5,400 vests from Safe Saling, Acomptance of the order will not require any variable seling and administrative expenses. The special order will not affect fixed expenses. The Safe Sailing pland has brough unused capacity to manufacture the additional vests. Water Fun Cruiselines has offered $9 per vest which is below the normal sale price of $14 Read the requirements Requlrumont 1. Prepare an incremental analysis to determine whether Sale Saling should accept this special sales order. (Enter a *o* for any zero balances, Use parentheses oca minus sign to indicato a negative contribution margin andra decrease in operating income from the special order) Total Order (5,400 units) Per Unit Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Decision Requirement 2. Identify long-term factors Safe Sailing should consider in deciding whether to accept the special sales order, in addition to determining the special order's effect on Operating profits, Sale Saling's managers also should consider the following: A. How will Sale Salling's competitors react? Will they retaliate by cutting their prices and starting a price war? OB. Will Sale Salling's other customers find out about the lower sale price Safe Salling accepted from Water Fun? If so, will these other customers demand lower sale prices? OC. Will loweong the sale price tamish Sale Saling's Image as a quality brand? D. All of the above