(a) & (b) Net income (b) Should ThreePoint Sports Inc. accept the special order?

Question

(a) & (b)

Net income

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

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 119,500 units.
Amount Sales $4,660,500 Cost of goods sold 3,675,040 Selling and administrative expenses 516,825 Net income $468,635
Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $236,000.

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 $0.77 per unit because of shipping costs but would not increase fixed costs and expenses.     

Explanation / Answer

ACCEPT THE PROJECT

wORKINGS

Reject
Order Accept
Order Net Income
Increase
(Decrease) Revenues 4660500 4930500 Cost of goods sold 3675040 3902240 Selling and administrative expenses 5,16,825 548025 Net income 4,68,635 4,80,235 11,600

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