ANSWERS Group Activity _6 Chapter 25 Section 2

ANSWERS Group Activity _6 Chapter 25 Section 2 - Review the...

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Review the information on the other side of this page and then answer each question below. 1) Should the company accept the special order? Prepare an incremental analysis and show your work. Briefly explain your answer. No, because the company loses money on the order, as shown below: Special Order Sales 300,000 COGS 280,000 30,000 Net Income (10,000) 2) Assume the company did not accept the order from the IBA and then receives another special order from a European company for 15,000 basketballs at $36. This order would increase variable selling and administrative expenses by $1.00 per unit. Should the company accept this order? Briefly explain your answer. No, the company cannot accept the order because they do not have the capacity. Since capacity for the company is 100,000 units (90,000 normal volume / 90%) and they currently operate at 90% of capacity the 15,000 order cannot be produced. 3)
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ANSWERS Group Activity _6 Chapter 25 Section 2 - Review the...

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