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Buoy manufactures flotation vests in Charleston, South Carolina. Buoy's contribution margin income statement for the month ended January 31, 2024, contains the following data:

Buoy
Income Statement
For the Month Ended January 31, 2024
Sales in Units	40,000
Net Sales Revenue	$800,000
Variable Costs:
Manufacturing	200,000
Selling and Administrative	104,000
Total Variable Costs	304,000
Contribution Margin	496,000
Fixed Costs:
Manufacturing	123,000
Selling and Administrative	88,000
Total Fixed Costs	211,000
Operating Income	$285,000

Requirements:

1. Identify each cost in the income statement as either relevant or irrelevant to Buoy's decision

2. Prepare a differential analysis to determine whether Buoy should accept this special sales order.

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

Part 1 Suppose Rafter wishes to buy 4,800 vests from Buoy. Buoy will not incur any variable selling and administrative expenses on the special order. The Buoy plant has enough unused capacity to manufacture the additional vests Rafter has offered $13 per vest, which is below the normal sales price of $20.

Question content area bottom Part 1 Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Buoy's decision.Variable Manufacturing Costs

irrelevant

relevant

Variable Selling and Administrative Costs

irrelevant

relevant

Fixed Manufacturing Costs

irrelevant

relevant

Fixed Selling and Administrative Costs

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