Three Point Sports Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and producing 120,000 units.
|Cost of goods sold||3,800,000|
|Selling and administrative expenses||405,000|
|Net Income||$ 795,000|
Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $225,000.
In July, normally a slack manufacturing month. ThreePoint Sports receives a special order for 10,000 basketballs at $28 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.75 per unit because of shipping costs but would not increase fixed costs and expenses.
- Prepare an incremental analysis for the special order.
- Should ThreePoint Sports inc. accept the special order? Explain your answer
- What is the minimum selling price on the special order to produce net income of $5.00 per ball?
- What nonfinancial factors should management consider in making its decision?