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Baldwin Athletic Supply (BAS) makes game jerseys for athletic teams. The B. D. Kaminski soccer club has offered to buy 120 jerseys for the teams
Baldwin Athletic Supply (BAS) makes game jerseys for athletic teams. The B. D. Kaminski soccer club has offered to buy 120 jerseys for the teams in its league for $16 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$2 per jersey. The annual fixed cost of equipmen used n the printing process is $12,600 and other fixed costs allocated to jerseys are S1,800. BAS makes about 2,400 jerseys per year, so the fixed cost is $6 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 $16 and our cost is $20, 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 reguirements. Requirement 1. Compute the amount by which the operating income of BAS would change if it accepted B. D. Kaminski's offer by using the contribution-margin approach. For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) i Effect o Requirements Special Order Units Requirements Sales 1. Compute the amount by which the operating income of BAS would change accepted B. D. Kaminski's offer. 2. Suppose you were the manager of BAS. Would you accept the offer? In addition to considering the quantitative impact computed in requirement 1, ist two qualitative considerations that would influence your decision-one qualitative factor supporting acceptance of the offer and one supporting rejection. Print Done
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