Nautical manufactures flotation vests in Tampa, Florida. Nautical's contribution margin income statement for the month ended December 31, 2024, contains the following data: (Click the icon to view the cost information.) Data table Income Statement For the Month Ended December 31, 2024 Sales in Units Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Nautical Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income $ $ 29,000 551,000 116,000 111,000 227,000 324,000 123,000 92,000 215,000 109,000 Suppose Water Works wishes to buy 4,800 vests from Nautical. Nautical will not incur any variable selling and administrative expenses on the special order. The Nautical plant has enough unused capacity to manufacture the additional vests. Water Works has offered $15 per vest, which is below the normal sales price of $19. X ht to Nautical's decision. cept this special sales order. (Enter decreases to revenue or increases to costs with a to accept the special sales order. gers also should consider the following: ted from Water Works? If so, will these other customers demand lower sale prices?
Nautical manufactures flotation vests in Tampa, Florida. Nautical's contribution margin income statement for the month ended December 31, 2024, contains the following data: (Click the icon to view the cost information.) Data table Income Statement For the Month Ended December 31, 2024 Sales in Units Net Sales Revenue Variable Costs: Manufacturing Selling and Administrative Total Variable Costs Contribution Margin Nautical Fixed Costs: Manufacturing Selling and Administrative Total Fixed Costs Operating Income $ $ 29,000 551,000 116,000 111,000 227,000 324,000 123,000 92,000 215,000 109,000 Suppose Water Works wishes to buy 4,800 vests from Nautical. Nautical will not incur any variable selling and administrative expenses on the special order. The Nautical plant has enough unused capacity to manufacture the additional vests. Water Works has offered $15 per vest, which is below the normal sales price of $19. X ht to Nautical's decision. cept this special sales order. (Enter decreases to revenue or increases to costs with a to accept the special sales order. gers also should consider the following: ted from Water Works? If so, will these other customers demand lower sale prices?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text:Nautical manufactures flotation vests in Tampa, Florida. Nautical's
contribution margin income statement for the month ended
December 31, 2024, contains the following data:
(Click the icon to view the cost information.)
Data table
Income Statement
For the Month Ended December 31, 2024
Sales in Units
Net Sales Revenue
Variable Costs:
Manufacturing
Selling and Administrative
Total Variable Costs
Contribution Margin
Nautical
Fixed Costs:
Manufacturing
Selling and Administrative
Total Fixed Costs
Operating Income
$
$
29,000
551,000
116,000
111,000
227,000
324,000
Suppose Water Works wishes to buy 4,800 vests from Nautical. Nautical will not incur any
variable selling and administrative expenses on the special order. The Nautical plant has enough
unused capacity to manufacture the additional vests. Water Works has offered $15 per vest,
which is below the normal sales price of $19.
123,000
92,000
215,000
109,000
X
ht to Nautical's decision.
cept this special sales order. (Enter decreases to revenue or increases to costs with a
to accept the special sales order.
gers also should consider the following:
ted from Water Works? If so, will these other customers demand lower sale prices?
Transcribed Image Text:Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Nautical's decision.
Variable Manufacturing Costs
Variable Selling and Administrative Costs
Fixed Manufacturing Costs
Fixed Selling and Administrative Costs
Requirement 2. Prepare a differential analysis to determine whether Nautical should accept this special sales order. (Enter decreases to revenue or increases to costs with a
parentheses or minus sign.)
Decision:
in operating income
▼
▼
▼
▼
Show Transcribed Text
Requirement 3. Identify long-term factors Nautical should consider in deciding whether to accept the special sales order.
In addition to determining the special order's effect on operating profits, Nautical's managers also should consider the following:
O A. Will Nautical's other customers find out about the lower sale price Nautical accepted from Water Works? If so, will these other customers demand lower sale prices?
OB. How will Nautical's competitors react? Will they retaliate by cutting their prices and starting a price war?
O C. Will the special order customer come back again and again, asking for the same reduced price?
OD. All of the above
O E. None of the above
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