Cole Sunglasses sell for about $175 per pair. Suppose the company incurs the following average costs per pair:(Click the icon to view the cost information.)Cole has enough idle capacity to accept a one-time-only special order from Lens Experts for 21,000 pairs of sunglasses at $86 per pair. Cole will not incur any variable marketing expenses for the order.RequirementsRequirement 1. How would accepting the order affect Cole's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Cole's managers consider in deciding whether to accept the order?Prepare the analysis to determine the effect on operating income. (Enter a zero, "0", in an input box if there is no expected change in the expense. Use parentheses or a minus sign for an expected decrease in operating income.)ColeIncremental Analysis of Special Sales OrderExpected increase in revenuesExpected increase in expenses:Variable manufacturing costFixed manufacturing costsTotal expected increase in expensesExpected increase (decrease) in operating income$1,806,000$168,000420,000588,000$1,218,000-Data tableDirect materials..Direct labour.....Variable manufacturing overhead..Variable marketing expenses..Fixed manufacturing overhead...Total cost..$55118420 *$98-Requirements1. How would accepting the order affect Cole's operating income? In addition to the special order'seffect on profits, what other (longer-term qualitative) factors should Cole's managers consider indeciding whether to accept the order?2. Cole's marketing manager, Jim Revo, argues against accepting the special order because theoffer price of $86 is less than Cole's $98 cost to make the sunglasses. Revo asks you, as one ofCole's staff accountants, to write a memo explaining whether his analysis is correct.PrintDone* $2,100,000 total fixed manufacturing overhead / 105,000 pairs of sunglassesPrintDone

Decision-making is a situation when the company needs to decide whether to go for an alternative or…

X I Requirements 1. How would accepting the order affect Cole's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Cole's managers consider in deciding whether to accept the order? 2. Cole's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $86 is less than Cole's $98 cost to make the sunglasses. Revo asks you, as one of Cole's staff accountants, to write a memo explaining whether his analysis is correct. Print Done

X I Requirements 1. How would accepting the order affect Cole's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Cole's managers consider in deciding whether to accept the order? 2. Cole's marketing manager, Jim Revo, argues against accepting the special order because the offer price of $86 is less than Cole's $98 cost to make the sunglasses. Revo asks you, as one of Cole's staff accountants, to write a memo explaining whether his analysis is correct. Print Done

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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