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PROSPORTS manufactures basketballs for professional basketball associations. It has budgeted the following sales and expenses for next year assuming the company operates at 80% capacity.
PROSPORTS manufactures basketballs for professional basketball associations. It has budgeted the following sales and expenses for next year assuming the company operates at 80% capacity. Amount Per unit Sales ( 90,000 units - all REGULAR SALES) 4,500,00l 50.00 *Cost of goods sold 35.00 *Selling and administrative expenses _ 4.00 Net income 11.00 *includes variable and fixed costs Fixed costs for the period consist of $990,000 for costs of goods sold and $162,000 for sel ing and administrative expenses. Pro Sports receives a special order for basketballs from the European Basketball Association. Accepting the special order would increase variable selling and administrative expenses by $ 1.00 per unit because of shipping costs but would not increase fixed costs . Required: (show all calculations) a) Assume the special order is for 15,000 units at $30 per unit. i. What is the minimum price Pro Sports should charge, in total and per unit, for this special order? ii. If Pro Sports accepts this special order by how much will net income increase or decrease? iii. Should Pro Sporzs accept the special order? b) Assume the special order is for 3C,000 units at $30 per unit. i. What is the minimum price Pro Sports should charge, in total and per unit, for this special order? ii. If Pro Sports accepts this special order by how much will net income increase or decrease? iii. Should Pro Sporzs accept the special order
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