6. Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Hobby - Cardz with a special order. The Hall of Fame wishes to purchase 58,000 baseball card packs for a special promotional campaign and offers $0.27 per pack, a total of $15,660. Hobby - Cardz's total production cost is $0.47 per pack, as follows: (Click the icon to view the cost information.) Hobby-Cardz has enough excess capacity to handle the special order. Read the requirements Requirement 1. Prepare a differential analysis to determine whether Hobby - Cardz should accept the special sales order. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues Expected increase in expenses Variable manufacturing cost: packs x D Expected (1) in operating income Decision: (2) Requirement 2. Now assume that the Hall of Fame wants special hologram baseball cards. Hobby - Cardz will spend $5,500 to develop this hologram, which will be useless after the special order is completed. Should Hobby-Cardz accept the special order under these circumstances, assuming no change in the special pricing of $0.27 per pack? Start by preparing the analysis with the additional cost for the special hologram. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues Expected increase in expenses: Variable manufacturing cost: packs xD Fixed manufacturing costs Expected increase in total expenses Expected (3) in operating income Decision: (4) 1: Data Table Variable costs: Direct materials Direct labor Variable overhead 0.10 0.04 0.08 0.25 Fixed overhead 0.47 Total cost 2: Requirements 1. Prepare a differential analysis to determine whether Hobby - Cardz should accept the special sales order. 2. Now assume that the Hall of Fame wants special hologram baseball cards. Hobby - Cardz will spend $5,500 to develop this hologram, which will be useless after the special order is completed. Should Hobby-Cardz accept the special order under these circumstances, assuming no change in the special pricing of $0.27 per pack? (1) (2) Accept the special sales order. Reject the special sales order. (3) O decrease O increase (4) O O Accept the special sales order. Reject the special sales order. O decrease O increase 7. Super-Ban Sunglasses sell for about $150 per pair. Suppose that the company incurs the following average costs per pair: (Click the icon to view the cost information.) Super-Ban has enough idle capacity to accept a one-time-only special order from Water Shades for 18,000 pairs of sunglasses at $91 per pair. Super-Ban will not incur any variable selling expenses for the order. Read the requirements Requirement 1. How would accepting the order affect Super - Ban's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Super - Ban's managers consider in deciding whether to accept the order? Prepare the analysis to determine the effect on operating income. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues sunglasses x Expected increase in expenses sunglasses x Expected (1) in operating income In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Super - Ban's managers consider in deciding whether to accept the order? O A. Will Super - Ban's other customers find out about the lower sale price Super-Ban offered to Water Shades? If so, will these other customers demand lower sale prices? O B. How will Super - Ban's competitors react? Will they retaliate by cutting their prices and starting a price war? O C. Will lowering the sale price tarnish Super - Ban's image as a high-quality brand? OD. All of the above O E. None of the above Requirement 2. Super - Ban's marketing manager, Peter White, argues against accepting the special order because the offer price of $91 is less than Super - Ban's $94 cost to make the sunglasses. White asks you, as one of Super - Ban's staff accountants, to explain whether his analysis is correct. What would you say? When deciding whether to accept a special order, we should compare the (2). Costs that we will incur whether or not we fill the order are (3) - - to our decision. This is why comparing the $91 price Water Shades offered us with our $94 total cost of making the sunglasses is (4) The additional revenues and the additional costs that we will incur to fill the special order are (5) the Water Shades special order, we will incur only $ of additional cost per pair, which is per pair that Water Shades offered. Therefore, we should (7) the special order to (8) operating income. If we accept (6) than the $91 the company's 1: Data Table Direct materials Direct labor Variable manufacturing overhead Variable selling expenses Fixed manufacturing overhead Total cost * $2,150,000 Total fixed manufacturing overhead / 86,000 Pairs of sunglasses