Baird Athletic Supply (BAS) makes game jerseys for athletic teams. The B. W. Krause soccer club has offered to buy 90 jerseys for the teams in its league for $12 per jersey. The team price for suchjerseys normally is $14, a 75% markup over BAS's purchase price of $8 per jersey BAS adds a name and number to each jersey at a variable cost of $2 per jersey. The annual fixed cost ofequipment used in the printing process is $4,600, and other fixed costs allocated to jerseys are $1,700, BAS makes about 2,100 jerseys per year, so the fixed cost is $3 per jersey. The equipment isused only for printing jerseys and stands idle 75% of the usable timeThe manager of BAS turned down the offer, saying, "If we sell at $12 and our cost is $13, we lose money on each jersey we sell. We would like to help your league, but we can't afford to lose moneyon the sale.Read the requirementsRequirement 1. Compute the amount by which the operating income of BAS would change if it accepted B. W. Krause's offer by using the contribution-margin approach. (For amounts with a 50-balance, make sure to enter "0" in the appropriate cell)UnitsSalesOperating incomeEffect ofSpecial Order

Relevant costing is a managerial accounting concept, as per this concept in the decision-making…

Answered: Baird Athletic Supply (BAS) makes game…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Talbot Industries manufactures two models of wireless headset: TI-12 and TI-28. Each product requires time on a single machine. The machine has a monthly capacity of 540 hours. Total market demand for the two products is limited to 2,000 units of TI-12 and 1,000 units of TI-28 monthly. Talbot is currently producing and selling 1,500 TI-12 models and 780 TI-28 models each month. Cost and machine-usage data for the two products are shown in the following spreadsheet, which analysts at Talbot use for production planning purposes: Price Less variable costs per unit Material Labor Overhead Contribution margin per unit Fixed costs Manufacturing Marketing and administrative Machine hours per unit Machine hours used Machine hours available Quantity produced Maximum demand Profit TI-12 $ 80 Required A Required B 23 29 8 $ 20 0.1
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