Problem 7-1 (Part Level Submission) (a) & (b) Problem 7-1 (Part Level Submission
ID: 2557573 • Letter: P
Question
Problem 7-1 (Part Level Submission)
(a) & (b)
Problem 7-1 (Part Level Submission)
Flint Sports Inc. manufactures basketballs for the Women’s National Basketball Association (WNBA). For the first 6 months of 2017, the company reported the following operating results while operating at 80% of plant capacity and producing 118,700 units.Amount Sales $4,748,000 Cost of goods sold 3,582,083 Selling and administrative expenses 503,262 Net income $662,655
Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $235,000.
In July, normally a slack manufacturing month, Flint 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 $0.77 per unit because of shipping costs but would not increase fixed costs and expenses.
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Reject Order Accept Order Net income Increase (Decrease) Revenues 4,748,000.00 5,028,000.00 280,000.00 Cost of goods sold 3,582,083.00 3,802,983.00 220,900.00 Selling and administrative expenses 503,262.00 510,962.00 7,700.00 Net income 662,655.00 714,055.00 51,400.00 Flint Sports Inc. should accept the special order since income would increase by 51,400. Additional revenue = 10000*28 280,000.00 Additional Cost of goods sold = (3,582,083 - 960,000)/118,700 * 10,000 220,900.00 Additional Selling and administrative expenses 7,700.00