Question

Metlock 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	$3,870,000	$50.00
Cost of goods sold	2,709,000	35.00
Selling and administrative expenses	301,860	3.90
Net income	$859,140	$11.10

Fixed costs for the period were cost of goods sold of  $ 774,000, and selling and administrative expenses of $ 139,320 .

In July, normally a slack manufacturing month, Metlock receives a special order for 7,740 basketballs at $ 30.00 each from the Italian Basketball Association. Accepting the order would increase variable selling and administrative expenses by $ 0.75 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. 5.25 and final answers to O decimal places, e.g. 125.)

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.)

Answer 1