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Old MathJax webview amount is 4500,000 ProSports manufactures basketballs for professional basketball associations. It has budgeted the following sales and expenses for 2022 assuming the
Old MathJax webview
amount is 4500,000
ProSports manufactures basketballs for professional basketball associations. It has budgeted the following sales and expenses for 2022 assuming the company is operating at 75% capacity. Full capacity is 120,000 units. Amount Per unit Sales (90,000 units) $4,900,000 $50.00 3,150,000 35.00 *Cost of goods sold *Selling and administrative expenses 360,000 4.00 Net income $990,000 $11.00 *includes variable and fixed costs Fixed costs for the period are $900,000 for costs of goods sold and $162,000 for selling and administrative expenses. Pro Sports receives a special order for basketballs at $30 each from the European Basketball Association. Accepting the special order would increase variable selling and administrative expenses by $2.50 per unit because of shipping costs but would not increase fixed costs and expenses. Consider each of the following independent situations: Show all your calculations. a) Assume the special order is for 15,000 units. i. What is the minimum price Pro Sports should charge, in total, for this special order? ji. If Pro Sports accepts this special order of 15,000 units at $30 per unit by how much will net income increase or decrease? Should Pro Sports accept the special order? b) Assume the special order is for 35,000 units. i. What is the minimum price Pro Sports should charge, in total and per unit, for this special order? (hint: compute the total price first) ii. Should Pro Sports accept the special order? c) Assume Pro Sports is operating at 100% and the special order is for 15,000 units. i. What is the minimum price Pro Sports should charge? Should Pro Sports accept the special order? WhyStep by Step Solution
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