Question - Shur Shot Sports Inc. manufactures basketballs for the Federation Basketball Association (FBA). For the first 6 months of 2015, the company reported the following operating results while operating at 80% of plant capacity and producing 130,000 units.
Sales $4,700,000 Cost of goods sold 3,500,000 Selling and administrative expenses 400,000 Net income $800,000
Fixed costs for the period were cost of goods sold $900,000, and selling and administrative expenses $200,00
In July, normally a slack manufacturing month, Shur Shot Sports receives a special order for 20,000 basketballs at $28 each from the Caribbean Basketball Association (CBA). Acceptance of the order would increase variable selling and administrative expenses $0.40 per unit because of shipping costs but would not increase fixed costs and expenses.
Make an incremental analysis for the special order, Should Shur Shot Sports Inc. accept the special order? Explain your answer, what is the minimum selling price on the special order to produce net income of $3.00 per ball? What nonfinancial factors should management consider in making its decision?