Accounting Boston Athletic Supply (BAS) makes game jerseys for athletic teams. The L. L. Kelly soccer club has offered to buy 150 jerseys for the teams in its league for $14 per jersey. The team price for such jerseys normally is $18, an 80% markup over BAS's purchase price of $10 per jersey. BAS adds a name and number to each jersey at a variable cost of $3 per jersey. The annual fixed cost ofequipment used in the printing process is $2,600, and other fixed costs allocated to jerseys are $2,000. BAS makes about 2,300 jerseys per year, so the fixed cost is $2 per jersey. The equipment is used only for printing jerseys and stands idle 75% of the usable time.The manager of BAS turned down the offer, saying, "If we sell at $14 and our cost is $15, we lose money on each jersey we sell. We would like to help your league, but we can't afford to lose money on the sale."Read the requirements.Requirement 1. Compute the amount by which the operating income of BAS would change if it accepted L. L. Kelly's offer by using the contribution-margin approach. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.)Effect ofSpecial OrderUnitsSalesOperating income

Under contribution margin approach:Sales - variable cost = Contribution marginContribution margin -…

Answered: Boston Athletic Supply (BAS) makes game…

Essentials Of Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 10P

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Cool Boards manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Lewis will sell bindings to Cool Boards for $16 each. Cool Boards would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding. Read the requirements. Requirement 1. Cool Boards' accountants predict that purchasing the bindings from Lewis will enable the company to avoid $1,800 of fixed overhead. Prepare an analysis to show whether Cool Boards should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Variable costs: Direct materials Direct labor Variable overhead Binding costs Fixed costs Purchase price from Lewis Transportation Logo Total differential cost of 1,800 bindings Should Cool Boards make or buy the bindings? Decision:…

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