Threepoint 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 120,100 units. amount sales $4,804,000 cost of goods sold 3,484,502 selling and administrative expenses 448,773 net income $870,725 fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $241,000. in july, normally a slack manufacturing month, threepoint 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 $0.77 per unit because of shipping costs but would not increase fixed costs and expenses. prepare an incremental analysis for the special order.

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?