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23 Prosports manufactures basketballs for professional basketball associations. It has budgeted the following sales and expenses for next year assuming the company operates at 90%
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Prosports manufactures basketballs for professional basketball associations. It has budgeted the following sales and expenses for next year assuming the company operates at 90% capacity. Fixed costs for the period consist of $1,080,000 for costs of goods sold and $162,000 for selling and administrative expenses. Pro Sports receives a special order for basketballs from the European Basketball Association. Accepting the special order would increase variable selling and administrative expenses by $1.25 per unit because of shipping costs but would not increase fixed costs. Required: (show all calculations) A) Assume the special order is for 10,000 units at $30 per unit. i)What is the minimum price Pro Sports should charge, in total and per unit, for this special order? Pro Sports receives a special order for basketballs from the European Basketball Association. Accepting the special order would increase variable selling and administrative expenses by $1.25 per unit because of shipping costs but would not increase fixed costs . Required: ( show all calculations) A) Assume the special order is for 10,000 units at $30 per unit. i)What is the minimum price Pro Sports should charge, in total and per unit, for this special order? ii) If Pro Sports accepts this special order, by how much will net income increase or decrease? iii) Should Pro Sports accept the special order? B) Assume the special order is for 40,000 units at $30 per unit. i)What is the minimum price Pro Sports should charge, in total and per unit, for this special order? ii) If Pro Sports accepts this special order, by how much will net income increase or decrease? iii) Should Pro Sports accept the special order Step by Step Solution
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