25-21A (similar to) flotation vests in Charleston, South Carolina income stateme

Question

25-21A (similar to) flotation vests in Charleston, South Carolina income statement for the month ended January 31, 2018, contains the following data EE (Click the ion to view the cost information ) selling and capacity to noemal sales price of $14 Read the requirements Requirement 1. Identifly each cost in the income statement as other relevant or irrelevent to Mermaid's decision Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs er(s) and then click Check Answer parts 3

Explanation / Answer

ans 1 ans explanation Variable Manufacturing cost Relevant It will be incurred   Variable selling & Adm costs Irrelevant It wont be incurred Fixed Manufacturing cost Irrelevant It has unsued capacity Fixed selling & Adm costs Irrelevant It wont change ans 2 Differential Analysis Revenue from special order (4000*6) 24000 Less: expenses associated with the order Variable Manufacturing expenses (4000*5) -20000 Increase in operating Income from special order 4000 Yes the special order should be accepted Variable Manufacturing cost per unit 200000/40000 5 ans 3 1) Lowering the price can decrease the image as a quality brand 2)The regular customer comes to know about the lower price. 3) The reaction of competitiors 4) Will there be any price war Dear student the options are not provided for answer 3 so answering according to my knowledge

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