Reference no: EM133096893
Question - Shamrock Inc. manufactures basketballs for professional basketball associations. For the first six months of 2022, the company reported the following operating results while operating at 90% of plant capacity:
|
|
Amount
|
Per Unit
|
|
Sales
|
$5,896,800
|
$52.00
|
|
Cost of goods sold
|
3,969,000
|
35.00
|
|
Selling and administrative expenses
|
498,960
|
4.40
|
|
Net income
|
$1,428,840
|
$12.60
|
Fixed costs for the period were cost of goods sold of $1,134,000, and selling and administrative expenses of $204,120.
In July, normally a slack manufacturing month, Shamrock receives a special order for 11,340 basketballs at $31.00 each from the Italian Basketball Association. Accepting the order would increase variable selling and administrative expenses by $0.25 per unit because of shipping costs, but it would not increase fixed costs and expenses.
Required -
1. Prepare an incremental analysis for the special order.
2. Should Shamrock Inc. accept the special order?
3. What is the minimum selling price on the special order to produce net income of $5.00 per ball?