ThreePoint Sports Inc. manufactures basketballs for the Women’s National Basketb

Question

ThreePoint Sports Inc. manufactures basketballs for the Women’s 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 118,500 units.

Sales- 4,503,000

Cost of Goods sold- 3,448,500

Selling and Administrative Expenses- 402,750

Net Income- 651,750

Fixed costs for the period were cost of goods sold $ 960,000 , and selling and administrative expenses $ 225,000 .

In July, normally a slack manufacturing month, ThreePoint 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.

Amount Sales $ 4,503,000 Cost of goods sold 3,448,500 Selling and administrative expenses 402,750 Net income $ 651,750 Fixed costs for the period were cost of goods sold $ 960,000 , and selling and administrative expenses $ 225,000 . In July, normally a slack manufacturing month, ThreePoint 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.

(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).)

b) Should ThreePoint Sports Inc. accept the special order?

What is the minimum selling price per unit on the special order to produce net income of $5.00 per ball? (Round answer to 2 decimal places, e.g. 15.25.)

Reject
Order Accept
Order Net Income
Increase
(Decrease) Revenues $ $ $ Cost of goods sold Selling and administrative expenses Net income $ $ $

Explanation / Answer

Reject Order Accept order Net Income increase (Decrease) Revenue           4,503,000          4,773,000 Cost of Goods Sold           3,448,500          3,739,513 Selling and administrative Expenes              402,750             444,037 Net Income              651,750             589,450            -62,300 Company Should not accept the special order because it’s decrease company profit Working Additional Sale 10000*27 270000 Cost of Goods sold per unit 3448500/118500 29.10 Additional Cost of goods slod 10000*29.1 291000 Selling and administrative expenses per unit 402750/118500                   3.40 Additional Cost per unit 0.73 Per unit cost for 10000 units                   4.13 Selling and administrative expenses for 10000 units               41,287 COGS per unit 29.10 Additional Selling Cost per unit 4.13 Profit per unit 5.00 Minimum Selling price Should be 38.23

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.