Answer these 2 problems.

Spe E8-21A Relevant Costs for Short-Term Decisions 485 1A Special order decisions given two scenarios (Learning Objective 3) Copose the Baseball Hall of Fame in Cooperstown New York has approached Collectibles & More with a special order. The Hall of Fame wants to purchase 53.000 baseball card packs for a special promotional campaian and offers 50.32 per pack total of $16.960. Collectibles & More's total production cost is $0.52 per pack, as CHAPTER follows: Variable costs: Direct materials Direct labor $0.11 Variable overhead 0.06 Fixed overhead ....... 0.10 Total cost ......... 0.25 $0.52 Collectibles & More has enough excess capacity to handle the special order. Requirements 1. Prepare an incremental analysis to determine whether Collectibles & More should ac cept the special sales order assuming fixed costs would not be affected by the special order. 2. Now assume that the Hall of Fame wants special hologram baseball cards. Collect- ibles & More must spend 55,100 to develop this hologram, which will be useless after the special order is completed. Should Collectibles & More accept the special order under these circumstances? Show your analysis. E8-22A Special order decision and considerations (Learning Objective 3) Jasper Mcknight Sunglasses sell for about $150 per pair. Suppose the company incurs the following average costs per pair: Direct materials... ..................... .. $40 . 12 Direct labor ....... Variable manufacturing overhead ....................... Variable marketing expenses... Fixed manufacturing overhead.............. . ............. 588 Total costs............ ..... -$2,100,000 total fixed manufacturing overhead/84,000 pairs of sunglasses Jasper Mcknight has enough idle capacity to accept a one-time-only special order from Arizona Glasses for 17.000 pairs of sunglasses at S63 per pair. Jasper McKnight will not incur any variable marketing expenses for the order. Requirements 1. How would accepting the order affect Jasper McKnight's operating income? in addition to the special order's effect on profits, what other (longer-term qualitative factors should Jasper McKnight's managers consider in deciding whether to accept the order? 2. Jasper Mcknight's marketing manager, Nick Ferritto, argues against accepting the special order because the offer price of 563 is less than Jasper McKnight's $88 cost to make the sunglasses. Ferritto asks you, as one of Jasper McKnight's staff accountants. to explain whether his analysis is correct