Pro sports inc. manufactures basketballs for the NBA. For thefirst 6 months of 2008, the company reported the following operating results while operating at 90% of plant capacity, andproducing 112,500 units.
sales 4,500,000
cost of goods sold 3,600,000
selling and administrative expenses 450,000
net income 450,000
Fixed costs for the period were; cost of goods sold 1,080,000,and selling and administrative expenses 225,000.
In july, normally a slack manufacturing month, pro sportsrecieves a special order for 10,000 basketballs at 28 dollars eachfrom he italian basketball association. Acceptance of the orderwould increase variable sellibg and adminstrative expenses 0.50 perunit becasue of shipping costs but would not increase fixed costsand expenses.
a) prepare an incremental analysis for the special order
b) should pro sports inc. accept the special order?explain.
c) what is the minimum selling price of the special order oproduce net income of 4.10 per ball
d) what non financial faxtors should managemnet consider inmaking its decision?