Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Bedford Athletic Supply (BAS) makes game jerseys for athletic teams. The S. H. Kaiser soccer club has offered to buy 110 jerseys for the teams
Bedford Athletic Supply (BAS) makes game jerseys for athletic teams. The S. H. Kaiser soccer club has offered to buy 110 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 $5,300, and other fixed costs allocated to jerseys are $1,900. BAS makes about 2,400 jerseys per year, so the fixed cost is $3 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 $16, 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. approach. (For amounts with a $0 palance, make sure to enter "U" in the appropriate cell.) Effect of Special Order 110 Units Sales 1540 Less variable costs: Purchase cost Less variable costs: Total variable costs Contribution margin Total fixed costs Operating income Choose from any list or enter any number in the input fields and then click Check
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started