Baird

Athletic Supply (BAS) makes game jerseys for athletic teams. The

K. J. Kennedy

soccer club has offered to buy

120

jerseys for the teams in its league for

$14

per jersey. The team price for such jerseys normally is

$21,

a

75%

markup over BAS's purchase price of

$12

per jersey. BAS adds a name and number to each jersey at a variable cost of

$1

per jersey. The annual fixed cost of equipment used in the printing process is

$1,800,

and other fixed costs allocated to jerseys are

$1,800.

BAS makes about

1,800

jerseys per year, so the fixed cost is

$2

per jersey. The equipment is used only for printing jerseys and stands idle 75% of the usable time.The manager of BAS turned down the offer, saying, "If we sell at

$14

and our cost is

$15,

we lose money on each jersey we sell. We would like to help your league, but we can't afford to lose money on the sale."Read the requirements

LOADING...

.

Requirement 1. Compute the amount by which the operating income of BAS would change if it accepted

K. J. Kennedy's

offer by using the contribution-margin approach. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.)

		Effect of
		Special Order
Units
Sales
Operating income