Arizona ceramics is approached by clarion hotels for a one-time special order of 1,000 ceramic vases at $10 per ceramic vase. managers at arizona have the following information relating to the cost: variable manufacturing costs$6fixed manufacturing costs4variable marketing costs2fixed marketing costs1full costs$13should arizona ceramics accept the special order? assume arizona ceramics has idle capacity of 2,000 units. yes, arizona ceramics should accept the special order as it recovers variable manufacturing costs and earns a contribution margin of $4 per ceramic vase. yes, arizona ceramics should accept the special order as it recovers total variable cost of $8 and also earns a contribution margin of $2 per ceramic vase. no, arizona ceramics should not accept the special order as it recovers only the manufacturing costs and earns no additional contribution. no, arizona ceramics should not accept the special order as it does not recover the full cost of the product.

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?