Homerun Corporation produces baseball bats for kids that it sells for $40 each. At capacity, the company can produce 56,000 bats a year. The costs of producing and selling 56,000 bats are as follows: (Click to view the costs.) Read the requirements. Requirement 1. Suppose Homerun is currently producing and selling 42,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Ripken Corporation wants to place a one-time special order for 14,000 bats at $32 each. Homerun will incur no variable selling costs for this special order. Should Homerun accept this one-time special order? Show your calculations. Determine the effect on operating income if the order is accepted. (Enter decreases in operating income with parentheses or a minus sign.) Increase (decrease) in operating income if order is accepted Data table Cost per Bat Total Costs $ 16 $ 896,000 4 224,000 Direct materials Variable direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses 2 112,000 7 392,000 1 56,000 280,000 5 Fixed selling expenses 35 $ 1,960,000 Total costs Print Done Requirements 1. Suppose Homerun is currently producing and selling 42,000 bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Ripken Corporation wants to place a one-time special order for 14,000 bats at $32 each. Homerun will incur no variable selling costs for this special order. Should Homerun accept this one-time special order? Show your calculations. 2. Now suppose Homerun is currently producing and selling 56,000 bats. If Homerun accepts Ripken's offer it will have to sell 14,000 fewer bats to its regular customers. (a) On financial considerations alone, should Homerun accept this one-time special order? Show your calculations. (b) On financial considerations alone, at what price would Homerun be indifferent between accepting the special order and continuing to sell to its regular customers at $40 per bat? (c) What other factors should Homerun consider in deciding whether to accept the one-time special order? Print Done