FN3140 Accounting and Finance for Business Unit 11 Handout

Suppose Boats-n-More wishes to buy 4,600 vests from Deep Blue. Acceptance of the order will not increase Deep Blue’s variable marketing and administrative expenses. The Deep Blue plant has enough unused capacity to manufacture the additional vests. Boats-n-More has offered $5 per vest, which is below the normal sale price of $14.

Prepare an incremental analysis to determine whether Deep Blue should accept this special sales order.

Identify long-term factors Deep Blue should consider in deciding whether to accept the special sales order.

FN3140 Accounting and Finance for Business
Unit 11 Handout: Research Paper Final

Deep Blue manufactures flotation vests in Charleston, South Carolina. Deep Blues contribution margin
income statement for the most recent month contains the following data:

Suppose Boats-n-More wishes to buy 4,600 vests from Deep Blue. Acceptance of the order will not increase
Deep Blues variable marketing and administrative expenses. The Deep Blue plant has enough unused
capacity to manufacture the additional vests. Boats-n-More has offered $5 per vest, which is below the
normal sale price of $14.
1. Prepare an incremental analysis to determine whether Deep Blue should accept this special sales order.
2. Identify long-term factors Deep Blue should consider in deciding whether to accept the special sales
order.

1