Problem 12-1

Sheffield 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 120,100 units.

		Amount
Sales		$4,804,000
Cost of goods sold		3,503,718
Selling and administrative expenses		447,783
Net income		$852,499

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, Sheffield 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 $0.73 per unit because of shipping costs but would not increase fixed costs and expenses.

What is the minimum selling price on the special order to produce net income of $5.17 per ball? (Round answer to 2 decimal places, e.g. 15.25.)

Reject Order Accept Order Net Income Increase (Decrease) Revenues TREX 0 5,074,000 270,000 x X Cost of goods sold xwwww 0 3,648,856 (145,138) X X Selling and administrative expenses 0 596,438 (148,655) X X X Net income 0 828,706 (23,793)