Question

ThreePoint Sports Inc. manufactures basketballs for the Women’s National Basketball Association (WNBA). For the first 6...

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

(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?

                                                                      YesNo

Homework Answers

Answer #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 $0 $290000 $290000
Cost of goods sold 0 -225000 -225000
Selling and administrative expenses 0 -28200 -28200
Net income $0 $36800 $36800



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

                                                                      Yes

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