Question
A baseball superstore has approached a baseball card manufacturer with a special order. They wish to purchase 57,000 baseball card packs for a special promotions
A baseball superstore has approached a baseball card manufacturer with a special order. They wish to purchase 57,000 baseball card packs for a special promotions campaign, and offers $0.41 per package, a total of $23,370. The manufacturers total production cost is $0.61 per pack as follows:
Variable Costs
Direct Materials - $0.13
Direct Labor - 0.06
Variable Overhead - 0.12
Fixed Overhead - 0.30
Total Cost - $0.61
The manufacturer has enough excess capacity to handle the special order.
1. Prepare a differential analysis to determine whether the manufacturer should accept the special sales order. (57,000) 2. Assume the store wants special hologram cards. The manufacturer will spend $5,900. to develop the hologram to be used after the cards are completed. Should they still accept the accept this order under these circumstances, assuming no change in the special pricing of $0.41 per pack?
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