Question
Cullumber Sports Inc. manufactures basketballs for the Womens National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating
Cullumber Sports Inc. manufactures basketballs for the Womens National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and producing 120,000 units.
Amount | |||
Sales | $ 4,680,000 | ||
Cost of goods sold | 3,685,200 | ||
Selling and administrative expenses | 499,200 | ||
Net income | $ 495,600 |
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, Cullumber 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 $ 0.76 per unit because of shipping costs but would not increase fixed costs and expenses.
(a) & (b)
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Your answer is correct.
(a) Prepare an incremental analysis for the special order. (Round all per unit computations to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Reject Order | Accept Order | Net Income Increase (Decrease) | |||||
Revenues | $ | $ | $ | ||||
Cost of goods sold | |||||||
Selling and administrative expenses | |||||||
Net income | $ | $ | $ |
(b) Should Cullumber Sports Inc. accept the special order? YesNo
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(c)
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Your answer is incorrect.
What is the minimum selling price on the special order to produce net income of $ 5.05 per ball? (Round answer to 2 decimal places, e.g. 15.25.)
Minimum selling price | $ |
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