Question
Problem 21-1A ThreePoint Sports Inc. manufactures basketballs for the Womens National Basketball Association (WNBA). For the first 6 months of 2017, the company reported the
Problem 21-1A ThreePoint 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 119,400 units.
Sales $ 4,656,600
Cost of goods sold 3,684,708
Selling and administrative expenses 526,292
Net income $ 445,600
Fixed costs for the period were cost of goods sold $ 960,000 , and selling and administrative expenses $ 266,000 .
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 $ 0.77 per unit because of shipping costs but would not increase fixed costs and expenses.
(a) Prepare an incremental analysis for the special order. (Round all per unit computations to 2 decimal places, e.g. 15.25. Enter negative amounts 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 $ $ $
(b) Should ThreePoint Sports Inc. accept the special order?
What is the minimum selling price on the special order to produce net income of $5.16 per ball? (Round answer to 2 decimal places, e.g. 15.25.)
Minimum selling price $
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