Belden Athletic Supply (BAS) makes game jerseys for athletic teams. The P.L. Kemp Soccer Club has offered to buy 100 jerseys for the teams in its league for $14 per jersey. The team price for such jerseys normally is $21, a 75% markup over BAS's purchase price of $12 per jersey. BAS adds a name and number to each jersey at a variable cost of $1 per jersey. The annual fixed cost of equipment used in the printing process is $5,800, and other fixed costs allocated to jerseys are $2,200. BAS makes about 2,000 per year, so the fixed cost is $4 per jersey. The equipment is used only for printing jerseys and stands idle 75% of the usable time.

The manager of BAS turned down the offer, saying if we sell $14 and our cost is $17, we lose money on each jersey we sell.

1. Compute the amount by which the operating income of BAS would change if it accepted P.L. Kemps offer by using the contribution-margin approach.

2. If you were the manager of BAS would you accept the offer? What two qualitive considerations that would influence your decision and one qualitive factor supporting acceptance of the offer and one supporting rejection..

Effects of special orders

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Sales:?