b. On the basis of quantitative information alone should Barkley Basketballs accept the special order from Genevieve Lillis? What is the contribution margin per basketball in the special order? Show all calculations and clearly state any assumptions you may make. [8 Marks]

c. Suggest three qualitative factors Barkley Basketballs should consider in making this decision. Explain each factor fully and discuss how it may affect the decision you reached in part (b) above. [6 Marks]

d. If Barkley Basketballs were operating at full capacity what would be the total opportunity cost of filling the special order for Genevieve Lillis, assuming the regular sales price of basketballs is $32. [4 Marks]

Question Two: [4 + 8 +6+4 = 22 Marks) Barkley Basketballs manufactures high-quality basketballs at its plant, which has a production capacity of 50,000 basketballs per month. Current production is 37,000 basketballs per month. The total costs of $25 per basketball are as follows: Direct Materials Direct Labour Manufacturing Overhead Sales Commission $12.00 2.00 10.00 1.00 Total Cost Per Basketball $25.00 Genevieve Lillis operates not-for-profit basketball camps for disadvantaged youths throughout the inner city and in large urban areas. Genevieve asks Stella Friend, the CFO of Barkley Basketballs, to sell her 5,000 basketballs at $14.00 per ball for upcoming camps she is organising. These camps are going to be run by well known basketball stars and will attract a lot of publicity. Genevieve has offered Barkley Basketballs the opportunity of free advertising at these camps if they supply the basketballs at the above price. Stella speaks to the cost accountant and goes to the production floor to speak to several supervisors to gather information for this decision. She determines that workers are paid an hourly wage and are sent home when there are no balls to manufacture. These workers have no guaranteed salary, but demand is stable so they always work at least half-time and often 40 hours a week. Stella asks about the manufacturing overhead and finds that it consists of variable and fixed costs incurred to run the plant where the basketballs are manufactured. Overhead includes insurance, property taxes, depreciation, utilities and various other plant-related costs. It is approximately 5% variable. Stella finds that all of the fixed overhead costs are related to a capacity level of 50,000 basketballs. The foreman warns her, however, that once production exceeds 40,000 basketballs, bottlenecks occur and the production process will slow down and cause inventory levels to congest the plant, causing overtime to be paid. The total overtime bill for producing basketballs when the maximum capacity of 50,000 basketballs is reached has typically been in the vicinity of $2,500. Overtime is not usually required to be paid when production stays below 40,000 basketballs per month. a. What are the attributes of relevant information for short-term decision making? [4 Marks)