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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
P7-1B Haslett Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2011, the company reported the following operating re- sults while operating at 90% of plant capacity.
Amount Per Unit
|
Sales |
$4,500,000 |
|
|
$50 |
|
|
Cost of goods sold |
3,150,000 |
|
|
35 |
|
|
Selling and administrative expenses |
360,000 |
|
|
4 |
|
|
Net income |
$ 990,000 |
|
|
$11 |
|
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Fixed costs for the period were: cost of goods sold $900,000, and selling and administra- tive expenses $135,000.
In July, normally a slack manufacturing month, Haslett receives a special order for 9,000 basketballs at $32 each from the European Basketball Association (EBA). Accep- tance 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.
Instructions
(a) Prepare an incremental analysis for the special order.
(b) Should Haslett Inc. accept the special order?
(c) What is the minimum selling price on the special order to produce net income of
$5.00 per ball?
(d) What nonfinancial factors should management consider in making its decision?
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