Question - Hyper Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2011, the company reported the following operating results while operating at 90% of plant capacity and Hyperducing 112,200 units.
Amount
Sales $4,488,000
Cost of goods sold 3,626,940
Selling and administrative expenses 435,336
Net income $425,724
Fixed costs for the period were: Cost of goods sold $1,080,000, and selling and administrative expenses $217,668.
In July, normally a slack manufacturing month, Hyper Sports receives a special order for 10,000 basketballs at $30 each from the Italian Basketball Association (IBA). Acceptance of the order would increase variable selling and administrative expenses $0.51 per unit because of shipping costs but would not increase fixed costs and expenses.
What is the minimum selling price on the special order to produce net income of $4.09 per ball?