Question

a & b

*Problem 7-1A a-b, c (Part Level Submission) (Video) VERSION ThreePoint Sports Inc, manufactures basketballs for the Women's National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and producing 119,400 units. Revenues Amount $4,776,000 3,509,190 513,516 $753, 294 Cost of goods sold Selling and administrative expenses Net Income Cost of goo Selling and Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $258,000. Net Income In July, normally a slack manufacturing month, ThreePoint Sports receives a special order for 10,000 basketballs at $27 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.73 per unit because of shipping costs but would not increase fixed costs and expenses. (b) Should *(a) & (b) (a) Prepare an incremental analysis for the special order. (Round all per unit computations to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number .. 45 or parentheses .. Click if you Reject Order SUBMIT ANS Net Income Increase (Decrease) Accept Order Revenues (c)

Answer 1

	Total cost	Total fixed cost	Total variable cost	Variable cost per unit ( Total variable cost / 119400 )
Cost of goods sold	3509190	960000	2549190	21.35
Selling and administrative expenses	513516	258000	255516	2.14

Variable selling and administrative expense per unit for special order = 2.14 + 0.73

2.87

(a)
	Reject Order	Accept Order	Net income increase (decrease)
Revenues	0	270000 ( 10000*27 )	270000
Cost of goods sold	0	213500 ( 10000*21.35 )	213500
Selling and administrative expenses	0	28700 ( 10000*2.87 )	28700
Net income	0	27800	27800

(b)

Answer : Accept

Explanation : As accepting the special order will increase the net income by 27800, the order should be accepted.