Blossom 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 $5,040,000 $50.00 Cost of goods sold 3,528,000 35.00 Selling and administrative expenses 453,600 4.50 Net income $1,058,400 $10.50 Fixed costs for the period were cost
Blossom 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 $5,040,000 $50.00 Cost of goods sold 3,528,000 35.00 Selling and administrative expenses 453,600 4.50 Net income $1,058,400 $10.50 Fixed costs for the period were cost
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Blossom 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:
Fixed costs for the period were cost of goods sold of $1,008,000, and selling and administrative expenses of $181,440.
In July, normally a slack manufacturing month, Blossom receives a special order for 10,080 basketballs at $32.00each from the Italian Basketball Association. Accepting the order would increase variable selling and administrative expenses by $0.50 per unit because of shipping costs, but it would not increase fixed costs and expenses.
|
Amount
|
Per Unit
|
|||
|---|---|---|---|---|
|
Sales
|
$5,040,000 | $50.00 | ||
|
Cost of goods sold
|
3,528,000 | 35.00 | ||
|
Selling and administrative expenses
|
453,600 | 4.50 | ||
|
Net income
|
$1,058,400 | $10.50 |
Fixed costs for the period were cost of goods sold of $1,008,000, and selling and administrative expenses of $181,440.
In July, normally a slack manufacturing month, Blossom receives a special order for 10,080 basketballs at $32.00each from the Italian Basketball Association. Accepting the order would increase variable selling and administrative expenses by $0.50 per unit because of shipping costs, but it would not increase fixed costs and expenses.
Prepare an incremental analysis for the special order. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125.)
|
Incremental revenue
|
$enter a dollar amount | |||
|---|---|---|---|---|
|
Incremental cost:
|
||||
|
Variable COGS
|
$enter a dollar amount | |||
|
Variable S & A
|
enter a dollar amount | |||
|
Additional S & A
|
enter a dollar amount | enter a subtotal of the three previous amounts | ||
|
Incremental income
|
$enter a total amount |
Should Blossom Inc. accept the special order?
| Blossom Inc. should select an option the special order. |
What is the minimum selling price on the special order to produce net income of $6.00 per ball? (Round answer to 2 decimal places, e.g. 15.25.)
| Minimum selling price | $enter the minimum selling price in dollars rounded to 2 decimal places |
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