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 120,300 units. Amount Sales $4,691,700 Cost of goods sold 3,533,217 Selling and administrative expenses 509,209 Net income $649,274 Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $265,000. In July, normally a slack manufacturing month, ThreePoint Sports receives a special order for 10,000 basketballs at $28 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. Collapse question part (a) & (b) (a) Prepare an incremental analysis for the special order

Answer 1

Here because of additional 10000 units there is increase in net income by $38500. Hence the special order is need to be accepted.