Pro Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2008, the company reported the following operating results while operating at 90% of plant capacity and producing 112,500 units.
|
Amount |
| |
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 Sports receives a special order for 10,000 basketballs at $28 each from the Italian Basketball Association (IBA). Acceptance of the order would increase variable selling and administrative expenses $0.50 per unit because of shipping costs but would not increase fixed costs and expenses.
Prepare an incremental analysis for the special order.