Prepare an incremental analysis for the special order

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Question - Oriole Inc. manufactures basketballs for the Women's National Basketball Association (WNBA). For the first 6 months of 2022, the company reported the following operating results while operating at 80% of plant capacity and producing 119,300 units.

 

Amount

Sales

$4,533,400

Cost of goods sold

3,513,020

Selling and administrative expenses

508,495

Net income

$511,885

Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $252,000.

In July, normally a slack manufacturing month, Oriole 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 $0.74 per unit because of shipping costs but would not increase fixed costs and expenses.

Required -

(a) How do prepare an incremental analysis for the special order.

(b) How do figure out what is the minimum selling price on the special order to produce net income of $5.11 per ball?

Reference no: EM133150377

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