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Haslett Inc. manufactures basketballs for the National Basketball Association (NBA).
Haslett Inc. manufactures basketballs for the National Basketball Association(NBA). For the first 6 months of 2009, the company reported the following operating resultswhile operating at 90% of plant capacity.Amount Per UnitSales $4,500,000 $50.00Cost of goods sold 3,150,000 35.00Selling and administrative expenses 360,000 4.00Net income $ 990,000 $11.00Fixed costs for the period were: Cost of goods sold $900,000, and selling and administrativeexpenses $135,000.In July, normally a slack manufacturing month, Haslett receives a special order for 9,000 basketballsat $32 each from the European Basketball Association (EBA). Acceptance of the orderwould increase variable selling and administrative expenses $0.50 per unit because of shippingcosts 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 perball?(d) What nonfinancial factors should management consider in making its decision?
