Question
Monty Sports Inc. manufactures basketballs for the Womens National Basketball Association (WNBA). For the first 6 months of 2017, the company reported the following operating
Monty Sports Inc. manufactures basketballs for the Womens National Basketball Association (WNBA). For the first 6 months of 2017, the company reported the following operating results while operating at 80% of plant capacity and producing 120,300 units.
Amount | |||
Sales | $4,571,400 | ||
Cost of goods sold | 3,713,667 | ||
Selling and administrative expenses | 534,893 | ||
Net income | $322,840 |
Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $257,000. In July, normally a slack manufacturing month, Monty Sports receives a special order for 10,000 basketballs at $28 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.75 per unit because of shipping costs but would not increase fixed costs and expenses.
Prepare an incremental analysis for the special order. (Round all per unit computations to 2 decimal places, e.g. 15.25. If amount decreases net income then enter the amount 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 | $ | $ | $ |
Should Monty Sports Inc. accept the special order? NoYes
eTextbook and Media
What is the minimum selling price on the special order to produce net income of $5.01 per ball? (Round answer to 2 decimal places, e.g. 15.25.)
Minimum selling price | $ |
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