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Aqua Fun manufactures flotation vests in Charleston, South Carolina. Aqua Fun's contribution margin income statement for the month ended December 31, 2024, contains the following data (Click Read the Requirem Variable M Variable S Fixed Mar Fixed Sell Requirem parenthese Data table Sales in Units Net Sales Revenue Variable Costs Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs Manufacturing Selling and Administrative Total Fixed Costs Operating Incume $ 42.000 588,000 210,000 104,000 314,000 274,000 126,000 95,000 221.000 53,000 - X Suppose Rafter wishes to buy 4,400 vests from Aqua Fun Aqua Fun will not incur any vanable selling and administrative expenses on the special order. The Aqua Fun plant has enough unused capacity to manufacture the additional vests Rafter has offered $0 per vest, which is below the normal sales price of $14 un's decision cial sales order. (Enter decreases to revenue or increases to costs with a

Aqua Fun manufactures flotation vests in Charleston, South Carolina. Aqua Fun's contribution margin income statement for the month ended December 31, 2024, contains the following data (Click Read the Requirem Variable M Variable S Fixed Mar Fixed Sell Requirem parenthese Data table Sales in Units Net Sales Revenue Variable Costs Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs Manufacturing Selling and Administrative Total Fixed Costs Operating Incume $ 42.000 588,000 210,000 104,000 314,000 274,000 126,000 95,000 221.000 53,000 - X Suppose Rafter wishes to buy 4,400 vests from Aqua Fun Aqua Fun will not incur any vanable selling and administrative expenses on the special order. The Aqua Fun plant has enough unused capacity to manufacture the additional vests Rafter has offered $0 per vest, which is below the normal sales price of $14 un's decision cial sales order. (Enter decreases to revenue or increases to costs with a

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Aqua Fun manufactures flotation vests in Charleston, South Carolina. Aqua Fun's contribution margin income statement for the month ended December 31, 2024, contains the following data: (Click Read the Requirem Variable M Variable S Fixed Mar Fixed Sell Requirem Data table Sales in Units Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs Manufacturing Selling and Administrative. Total Fixed Costs Operating Income $ S 42.000 588,000 210,000 104.000 314.000 274,000 126,000 95.000 221.000 53,000 - X Suppose Rafter wishes to buy 4,400 vests from Aqua Fun. Aqua Fun will not incur any variable selling and administrative expenses on the special order. The Aqua Fun plant has enough unused capacity to manufacture the additional vests. Rafter has offered $9 per vest, which is below the normal sales price of $14. un's decision ecial sales order. (Enter decreases to revenue or increases to costs with a
Transcribed Image Text:Aqua Fun manufactures flotation vests in Charleston, South Carolina. Aqua Fun's contribution margin income statement for the month ended December 31, 2024, contains the following data: (Click Read the Requirem Variable M Variable S Fixed Mar Fixed Sell Requirem Data table Sales in Units Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Fixed Costs Manufacturing Selling and Administrative. Total Fixed Costs Operating Income $ S 42.000 588,000 210,000 104.000 314.000 274,000 126,000 95.000 221.000 53,000 - X Suppose Rafter wishes to buy 4,400 vests from Aqua Fun. Aqua Fun will not incur any variable selling and administrative expenses on the special order. The Aqua Fun plant has enough unused capacity to manufacture the additional vests. Rafter has offered $9 per vest, which is below the normal sales price of $14. un's decision ecial sales order. (Enter decreases to revenue or increases to costs with a
Requirement 1. Identily each cost in the income statement as either relevant or irelevant to Aqua Fun's decision Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Seling and Administrative Costs Decision Y in operating income T T T Requirement 2. Prepare a differential analysis to determine whether Aqua Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign) E CUTC Show Transcribed Text Ű Requirement 3. Identify long-term factors Aqua Fun should consider in deciding whether to accept the special sales order In addition to determining the special order's effect on operating profits, Aqua Fun's managers also should consider the following OA Will Aqua Fun's other customers find out about the lower sale price Aqua Fun accepted from Rafter? If so, will these other customers demand lower sale prices? OB. Will the special order customer come back again and again, asking for the same reduced price? OC. How will Aqua Fun's competitors react? Will they retaliate by cutting their prices and starting a price war? OD. All of the above E. None of the above
Transcribed Image Text:Requirement 1. Identily each cost in the income statement as either relevant or irelevant to Aqua Fun's decision Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Seling and Administrative Costs Decision Y in operating income T T T Requirement 2. Prepare a differential analysis to determine whether Aqua Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign) E CUTC Show Transcribed Text Ű Requirement 3. Identify long-term factors Aqua Fun should consider in deciding whether to accept the special sales order In addition to determining the special order's effect on operating profits, Aqua Fun's managers also should consider the following OA Will Aqua Fun's other customers find out about the lower sale price Aqua Fun accepted from Rafter? If so, will these other customers demand lower sale prices? OB. Will the special order customer come back again and again, asking for the same reduced price? OC. How will Aqua Fun's competitors react? Will they retaliate by cutting their prices and starting a price war? OD. All of the above E. None of the above
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