"problem 20-01a a-b, c carla vista sports inc. manufactures basketballs for the women’s national basketball association (wnba). for the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and producing 118,600 units. amount sales $4,506,800 cost of goods sold 3,475,506 selling and administrative expenses 498,060 net income $533,234 fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $249,000. in july, normally a slack manufacturing month, carla vista sports receives a special order for 10,000 basketballs at $28 each from the greek basketball association (gba). acceptance of the order would increase variable selling and administr ative expenses $0.73 per unit because of shipping costs but would not increase fixed costs and expenses."(a) prepare an incremental analysis for the special order. (round all per unit computations to 2 decimal places,

Effect on income= $26,700

Explanation:

Giving the following information:

Producing 118,600 units. Amount Sales $4,506,800 Cost of goods sold 3,475,506 Selling and administrative expenses 498,060 Net income $533,234 Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $249,000. In July, normally a slack manufacturing month, Carla Vista Sports receives a special order for 10,000 basketballs at $28 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.73 per unit because of shipping costs but would not increase fixed costs and expenses.

Unitary variable  cost= (3,475,506 - 960,000)/118,600= $21.2

Unitary variable selling and administrative= (533,234 - 249,000)/118,600= 2.40

New offer:

10,000 units for $28

Total unitary variable cost= (21.2 + 2.4 + 0.73)= $24.33

Effect on income= 10,000*(28 - 24.33)= $26,700

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