7-1

Sheffield Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the first 6 months of 2017, the company reported the following operating results while operating at 80% of plant capacity and producing 120,100 units.

Amount

Sales $4,804,000

Cost of goods sold 3,503,718

Selling and administrative expenses 447,783

_________

Net income $852,499

__________

Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $228,000.

In July, normally a slack manufacturing month, Sheffield Sports receives a special order for 10,000 basketballs at $27 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.73 per unit because of shipping costs but would not increase fixed costs and expenses.

(a) & (b)

show incremental analysis for the special order.

Net Income Reject Accept Increase Order Order (Decrease) $ $ Revenues $ Cost of goods sold Selling and administrative expenses $ $ Net income $ Should Shefeld Sports Inc. accept the special order