ShurShot Sports Inc. manufactures basketballs for the National Basketball Associ

Question

ShurShot Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2014, the company reported the following operating results while operating at 80% of plant capacity and producing 119,600 units.



Amount
Sales
$4,664,400
Cost of goods sold
3,665,456
Selling and administrative expenses
557,336
Net income
$441,608

Fixed costs for the period were cost of goods sold $1,080,900, and selling and administrative expenses $278,668.

  In July, normally a slack manufacturing month, ShurShot Sports receives a special order for 10,600 basketballs at $28 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.49 per unit because of shipping costs but would not increase fixed costs and expenses. ShurShot Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2014, the company reported the following operating results while operating at 80% of plant capacity and producing 119,600 units.



Amount
Sales
$4,664,400
Cost of goods sold
3,665,456
Selling and administrative expenses
557,336
Net income
$441,608

Fixed costs for the period were cost of goods sold $1,080,900, and selling and administrative expenses $278,668.

  In July, normally a slack manufacturing month, ShurShot Sports receives a special order for 10,600 basketballs at $28 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.49 per unit because of shipping costs but would not increase fixed costs and expenses. Problem 21-1A (Part Level Submission)

Explanation / Answer

Revenues
10,600 x $28 = $296,800

Cost of goods sold
[(3,665,456 - 1,080,900) / 119,600] = $21.61 COGS variable cost per unit

21.61 x 10,600 = $229,066

Selling and administrative exp.
(557,336 - 278,668) / 119,600 = $2.33 cost per unit
(2.33 + 0.49) x 10,600 = $29,892

Net income
296,800 - 229,066 - 29,892 = $37,842

Accept order

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