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 119,500 units.
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Amount
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Sales
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$4,899,500
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Cost of goods sold
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3,635,110
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Selling and administrative expenses
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406,300
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|
Net income
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$858,090
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Fixed costs for the period were cost of goods sold $1,080,200, and selling and administrative expenses $203,150.
In July, normally a slack manufacturing month, ShurShot Sports receives a special order for 10,200 basketballs at $28 each from the Greek Basketball Association (GBA). 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.