ThreePoint Sports Inc. manufactures basketballs for the Women\'s National Basket

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 118,700 units. Amount $4,629,300 ,455,074 Sales Cost of goods sold Selling and administrative 483,156 expenses Net income $691,070 Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $260,000 In July, normally a slack manufacturing month, ThreePoint Sports receives a special order for 10,000 basketballs at $30 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.74 per unit because of shipping costs but would not increase fixed costs and expenses (a) & (b) (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 Cost of goods sold Selling and administrative expenses Net income (b) Should ThreePoint Sports Inc. accept the special order? Click if you would like to Show Work for this question:

Explanation / Answer

a) Incremental analysis :

b) Yes, Threepoint should accept the special order.

Reject order Accept order Net income increase (decrease) Revenues 0 300000 300000 Cost of goods sold 0 (21.02*10000) = -210200 -210200 Selling and administrative expense 0 (2.62*10000) = -26200 -26200 Net income 0 63600 63600

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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