Ivanhoe Inc. manufactures basketballs for professional basketball associations. For the first six months of 2022,...
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Accounting
Ivanhoe Inc. manufactures basketballs for professional basketball associations. For the first six months of 2022, the company reported the following operating results while operating at 90% of plant capacity:
Amount
Per Unit
Sales
$5,875,200
$51.00
Cost of goods sold
4,032,000
35.00
Selling and administrative expenses
472,320
4.10
Net income
$1,370,880
$11.90
Fixed costs for the period were cost of goods sold of $1,152,000, and selling and administrative expenses of $207,360. In July, normally a slack manufacturing month, Ivanhoe receives a special order for 11,520 basketballs at $32.00 each from the Italian Basketball Association. Accepting the order would increase variable selling and administrative expenses by $0.25 per unit because of shipping costs, but it would not increase fixed costs and expenses.
Prepare an incremental analysis for the special order. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125.)
Incremental revenue
$enter a dollar amount
Incremental cost:
Variable COGS
$enter a dollar amount
Variable S & A
enter a dollar amount
Additional S & A
enter a dollar amount
enter a subtotal of the three previous amounts
Incremental income
$enter a total amount
Should Ivanhoe Inc. accept the special order?
Ivanhoe Inc. should select an option acceptreject the special order.
What is the minimum selling price on the special order to produce net income of $6.00 per ball? (Round answer to 2 decimal places, e.g. 15.25.)
Minimum selling price
$enter the minimum selling price in dollars rounded to 2 decimal places
Answer & Explanation
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