Question
P7-1A ThreePoint Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the fi rst 6 months of 2017, the company reported the
P7-1A ThreePoint Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the fi rst 6 months of 2017, the company reported the following operating results while operating at 80% of plant capacity and producing 120,000 units. Use incremental analysis for special order and identify nonfi nancial factors in the decision. (LO 2), E Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $225,000. In July, normally a slack manufacturing month, ThreePoint 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 fi xed costs and expenses. Instructions (a) Prepare an incremental analysis for the special order. (b) Should ThreePoint Sports Inc. accept the special order? Explain your answer. (c) What is the minimum selling price on the special order to produce net income of $5.00 per ball? (d) What nonfi nancial factors should management consider in making its decision?
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