ThreePoint Sports Inc. manufactures basketballs for the Women’s National Basketb

Question

ThreePoint Sports Inc. manufactures basketballs for the Women’s National Basketball Association (WNBA). For the first 6 months of 2017, the company reported the following operating results while operating at 80% of plant capacity and producing 119,100 units.

Problem 7-1A ThreePoint Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the first 6 months of 2017, the company reported the following operating results while operating at 80% of plant capacity and producing 119,100 units. Sales Cost of goods sold Selling and administrative expenses Net income Amount $4,525,800 3,519,459 412,841 $593,500 Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $233,000. In July, normally a slack manufacturing month, ThreePoint Sports receives a special order for 10,000 basketballs at $29 each from the Greek Basketball Association (GBA) Acceptance of the order would increase variable selling and administrative expenses $0.76 per unit because of shipping costs but would not increase fixed costs and expenses.

Explanation / Answer

Req A. Total Cost of Goods sold    $ 3519,459 Less: Fixed nature                $ 960,000 Variable Cost of goods        $ 25,59,459 Production units 119,100 units Cost of goods sold Variable ( 2559459/119100)= $ 21.49 per unit Total Selling and admin Expense   $ 412,841 Less: Fixed nature                                $ 233,000 Variable selling and admn expense $ 179,841 Per unit variable selling admin expense (179841/119100) = $ 1.51 per unit Reject Orders Accept order Net Income Increase/ (Decrease) Sales revenue (119100 units) 4525800 (Additional 10,000 balss @29) 4815800 290,000 Less: Variable cost of Goods sold 2559459 (Additional 10,000 units@21.49) 2774359 -214900 Less: variable Selling and admin expense 179841 (Additional 10,000 units@(1.51+0.76) 202541 -22700 Net income 1786500 1838900 52400 ReqB. The Order must be accepted as it increase the net income by $ 52,400

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