Create an incremental analysis for the special order

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Reference no: EM132638881

Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the fi rst 6 months of 2017, the company reported the following operating results while operating at 80% of plant capacity and producing 120,000 units. Use incremental analysis for special order and identify nonfi nancial factors in the decision. (LO 2), E Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $225,000. 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 $0.75 per unit because of shipping costs but would not increase fixed costs and expenses.

Instructions

Question (a) Prepare an incremental analysis for the special order.

Question (b) Should ThreePoint Sports Inc. accept the special order? Explain your answer.

Question (c) What is the minimum selling price on the special order to produce net income of $5.00 per ball?

Question (d) What non financial factors should management consider in making its decision?

Reference no: EM132638881

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