E26-1 Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Sports-Cardz, Inc., with a
Question:
E26-1 Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Sports-Cardz, Inc., with a special order. The Hall of Fame wishes to purchase 100,000 baseball card packs for a special promotional campaign and offers $0.95 per pack, a total of $95,000. Sports-Cardz total production cost is $1.25 per pack, as follows: Variable costs: Direct materials $0.20 Direct labor. 0.14 Variable overhead 0.41 Fixed overhead. 0.50 Total cost $1.25 Sports-Cardz has enough excess capacity to handle the special order. Required 1. Prepare an incremental analysis to determine whether Sports-Cardz should accept the special sales order. 2. Now assume that the Hall of Fame wants special hologram baseball cards. Sports-Cardz will spend $35,000 to develop this hologram, which will be useless after the special order is completed. Should Sports-Cardz accept the special order under these circumstances?
Step by Step Answer:
Accounting
ISBN: 9780130906991
5th Edition
Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones