Question
ThreePoint Sports Inc. manufactures basketballs for the Womens National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating
ThreePoint Sports Inc. manufactures basketballs for the Womens National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and producing 118,800 units.
Amount | |||
---|---|---|---|
Sales | $4,514,400 | ||
Cost of goods sold | 3,633,000 | ||
Selling and administrative expenses | 517,540 | ||
Net income | $363,860 |
Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $274,000. In July, normally a slack manufacturing month, ThreePoint Sports receives a special order for 10,000 basketballs at $29 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.
Part 1
(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 | $enter revenues in dollars | $enter revenues in dollars | $enter revenues in dollars | ||||
Cost of goods sold | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | ||||
Selling and administrative expenses | enter selling and administrative expenses in dollars | enter selling and administrative expenses in dollars | enter selling and administrative expenses in dollars | ||||
Net income | $enter net income in dollars | $enter net income in dollars | $enter net income in dollars |
(b) Should ThreePoint Sports Inc. accept the special order? select between Yes and NoYesNo YesNo
eTextbook and Media
- eTextbook
Part 2
What is the minimum selling price on the special order to produce net income of $5.11 per ball? (Round answer to 2 decimal places, e.g. 15.25.)
Minimum selling price | $enter the minimum selling price rounded to 2 decimal places |
eTextbook and Media
- eTextbook
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