Question 2 (25 marks) Batter Up Corp produces baseball bats for kids that it sells for $37 each. At capacity, the company can produce 54,000 bats a year. The costs of producing and selling 54,000 bats are as follows: Direct Materials Variable direct manufacturing labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total costs Total Costs $756,000 216,000 108,000 270,000 108,000 162,000 $1,620,000 1. Assume the company is producing and selling 44,000 bats. At this level of production and sales, its fixed sales are the same as given in the table above. PopFly Corp wants to place a one-time special order for 10,000 bats at $21 per bat. Batter Up will not incur any variable selling costs for this special order. Should Batter Up accept the one-time special order? Show your calculations. (5 marks) 2. Now suppose BatterUp is producing and selling 54,000 bats. If the firm accepts PopEly's offer, it will have to sell 10,000 fewer bats to its regular customers. a) On financial considerations only, should Batter Up accept the PopFly one-time special order? Show your calculations.(5 marks) b) On financial considerations only, at what price would Batter Up be indifferent between accepting the special order and continuing to sell to current customers at $37 per bat. (5 marks) c) What other factors should Batterup consider in deciding whether to accept the one-time order? (5 marks). 3. Batter Up offers a 30 day return policy on its products. BatterUp would deliver the bats to Popely on Dec 20th, 10 days before its year end of December 31. PopFly is a large firm and there would be no collection issues on the sale. Batter Up's President would like you to apply the relevant ASPE GAAP rules to make a recommendation if BatterUp could recognize the bat revenue by December 31st. (5 marks)