Answer:
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
