Sports R Us produces basketballs. Recently the local in-house team contacted them about purchasing 2,000 basketballs and has agreed to pay $18 per ball plus $3 per ball for shipping. The current year’s production is 22,000 basketballs and total capacity is 25,000 balls. The following costs pertain to the production of basketballs.
Direct Materials | $9.20 |
Direct Labor | $4.00 |
VOH | $3.80 |
FOH | $4 |
Cost per ball | $20.64 |
Prepare an incremental analysis. Should Sports R Us accept the special Order? Why? |
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