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Oriole Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the first 6 months of 2022, the company reported the following operating results while operating at 80% of plant capacity and producing 119,300 units. Sales Cost of goods sold Selling and administrative expenses Net income Amount $4,533,400 3,513,020 508,495 $511,885 Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $252,000. In July, normally a slack manufacturing month. Oriole Sports receives a special order for 10.000 basketballs at $28 each from the

Oriole Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the first 6 months of 2022, the company reported the following operating results while operating at 80% of plant capacity and producing 119,300 units. Sales Cost of goods sold Selling and administrative expenses Net income Amount $4,533,400 3,513,020 508,495 $511,885 Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $252,000. In July, normally a slack manufacturing month. Oriole Sports receives a special order for 10.000 basketballs at $28 each from the

FINANCIAL ACCOUNTING
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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Oriole Sports Inc. manufactures basketballs for the Women’s National Basketball Association (WNBA). For the first six months of 2022, the company reported the following operating results while operating at 80% of plant capacity and producing 119,300 units. | | Amount | |-----------------|--------------| | **Sales** | $4,533,400 | | **Cost of goods sold** | $3,513,020 | | **Selling and administrative expenses** | $508,495 | | **Net income** | $511,885 | Fixed costs for the period were as follows: - Cost of goods sold: **$960,000** - Selling and administrative expenses: **$252,000** In July, which is typically a slow manufacturing month, Oriole Sports received 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 by $0.74 per unit due to shipping costs, but it would not increase fixed costs and expenses.
Transcribed Image Text:Oriole Sports Inc. manufactures basketballs for the Women’s National Basketball Association (WNBA). For the first six months of 2022, the company reported the following operating results while operating at 80% of plant capacity and producing 119,300 units. | | Amount | |-----------------|--------------| | **Sales** | $4,533,400 | | **Cost of goods sold** | $3,513,020 | | **Selling and administrative expenses** | $508,495 | | **Net income** | $511,885 | Fixed costs for the period were as follows: - Cost of goods sold: **$960,000** - Selling and administrative expenses: **$252,000** In July, which is typically a slow manufacturing month, Oriole Sports received 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 by $0.74 per unit due to shipping costs, but it would not increase fixed costs and expenses.
### Incremental Analysis for Special Order #### Instructions: (a) Prepare an incremental analysis for the special order. Ensure to round all per unit computations to two decimal places, e.g., 15.25. Enter negative amounts using either a negative sign preceding the number, e.g., -45, or parentheses, e.g., (45). #### Table Breakdown: The table below is designed to compare the financial implications of rejecting versus accepting a special order. The analysis focuses on the changes to key financial metrics: revenues, cost of goods sold, selling and administrative expenses, and net income. | | Reject Order | Accept Order | Net Income Increase (Decrease) | |------------------------------|--------------|--------------|---------------------------------| | **Revenues** | $0 | | $ | | **Cost of goods sold** | $0 | | $ | | **Selling and administrative expenses** | $0 | | $ | | **Net income** | $0 | | $ | To fill out this table: 1. **Revenues:** Enter the revenue values for rejecting and accepting the order. Calculate the difference and enter it in the Net Income Increase (Decrease) column. 2. **Cost of Goods Sold:** Enter the cost of goods sold for both rejecting and accepting states. Calculate and enter the difference. 3. **Selling and Administrative Expenses:** Similarly, enter the selling and administrative expenses for both rejecting and accepting the order. Calculate and document the difference. 4. **Net Income:** Compute the net income in both cases and write the difference under Net Income Increase (Decrease). --- (b) **Question:** Should Oriole Sports Inc. accept the special order? This section is designed for users to provide their decision regarding the acceptance of the special order based on the incremental analysis conducted in section (a). #### Dropdown Selection: A dropdown menu is provided for the user to select their answer. --- This analysis helps in making informed financial decisions by comparing the incremental benefits and costs associated with accepting a special order.
Transcribed Image Text:### Incremental Analysis for Special Order #### Instructions: (a) Prepare an incremental analysis for the special order. Ensure to round all per unit computations to two decimal places, e.g., 15.25. Enter negative amounts using either a negative sign preceding the number, e.g., -45, or parentheses, e.g., (45). #### Table Breakdown: The table below is designed to compare the financial implications of rejecting versus accepting a special order. The analysis focuses on the changes to key financial metrics: revenues, cost of goods sold, selling and administrative expenses, and net income. | | Reject Order | Accept Order | Net Income Increase (Decrease) | |------------------------------|--------------|--------------|---------------------------------| | **Revenues** | $0 | | $ | | **Cost of goods sold** | $0 | | $ | | **Selling and administrative expenses** | $0 | | $ | | **Net income** | $0 | | $ | To fill out this table: 1. **Revenues:** Enter the revenue values for rejecting and accepting the order. Calculate the difference and enter it in the Net Income Increase (Decrease) column. 2. **Cost of Goods Sold:** Enter the cost of goods sold for both rejecting and accepting states. Calculate and enter the difference. 3. **Selling and Administrative Expenses:** Similarly, enter the selling and administrative expenses for both rejecting and accepting the order. Calculate and document the difference. 4. **Net Income:** Compute the net income in both cases and write the difference under Net Income Increase (Decrease). --- (b) **Question:** Should Oriole Sports Inc. accept the special order? This section is designed for users to provide their decision regarding the acceptance of the special order based on the incremental analysis conducted in section (a). #### Dropdown Selection: A dropdown menu is provided for the user to select their answer. --- This analysis helps in making informed financial decisions by comparing the incremental benefits and costs associated with accepting a special order.
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