Prepare an incremental analysis for the special order. NI increase $37,500 Should S Sports Inc. accept the special order? Explain your answer. What is the minimum selling price on the special order to produce net income of $5.00 per ball?
Prepare an incremental analysis for the special order. NI increase $37,500 Should S Sports Inc. accept the special order? Explain your answer. What is the minimum selling price on the special order to produce net income of $5.00 per ball?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
S Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2022, the company reported the following operating results while operating at 80% of plant capacity and producing 120,000 units.
Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $225,000.
In July, S Sports receives a special order for 10,000 basketballs at $28 each from the Philippine Basketball Association (PBA). Acceptance of the order would increase variable selling and administrative expenses $0.75 per unit because of shipping costs but would not increase fixed costs and expenses.
Instructions
- Prepare an incremental analysis for the special order.
- NI increase $37,500
- Should S Sports Inc. accept the special order? Explain your answer.
- What is the minimum selling price on the special order to produce net income of $5.00 per ball?
- What nonfinancial factors should management consider in making its decision?
Transcribed Image Text:Sales
Cost of goods sold
Selling and administrative expenses
Net income
Amount
$4,800,000
3,600,000
405,000
$ 795,000
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