Question:Pro Sports Inc. manufactures basketballs for professional
basketball associations. For the first six months of 2020,...
Question
Pro Sports Inc. manufactures basketballs for professional
basketball associations. For the first six months of 2020,...
Pro Sports Inc. manufactures basketballs for professional
basketball associations. For the first six months of 2020, the
company reported the following operating results while operating at
90% of plant capacity:
Amount
Per Unit
Sales
$5,709,600
$52.00
Cost of goods sold
3,733,200
34.00
Selling and administrative expenses
417,240
3.80
Net income
$1,559,160
$14.20
Fixed costs for the period were cost of goods sold of $1,098,000,
and selling and administrative expenses of $197,640.
In July, normally a slack manufacturing month, Pro Sports receives
a special order for 10,980 basketballs at $30 each from the Italian
Basketball Association. Accepting the order would increase variable
selling and administrative expenses by $1.00 per unit because of
shipping costs, but it would not increase fixed costs and expenses.
(a)
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Prepare an incremental analysis for the special order.
(Round per unit calculations to 2 decimal places, e.g.
15.25 and final answers to 0 decimal places, e.g.
125.)
Incremental revenue
$
Incremental cost:
Variable COGS
$
Variable S & A
Additional S & A
Incremental income
$
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(b)
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Should Pro Sports Inc. accept the special order?
Pro Sports Inc. should
acceptreject
the special order.
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(c)
What is the minimum selling price on the special order to produce
net income of $5.00 per ball? (Round answer to the 2
decimal places, e.g. 15.25.)
Minimum selling price
$
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earn points based on the Point Potential Policy set by your
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