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Q1: 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
Q1: 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 57,000 baseball card packs for a special promotional campaign and offers $0.41 per pack, a total of $23,370. Hobby-Cardz's total production cost is $0.61 per pack, as follows: Variable costs: Direct materials Direct labor Variable overhead Fixed overhead Total cost $ 0.13 0.06 0.12 0.30 $ 0.61 Hobby-Cardz has enough excess capacity to handle the special order. Requirements A. In the table below, prepare a differential analysis to determine whether Hobby-Cardz should accept the special sales order. Reject Order Accept Order Net Income Increase (Decrease) Revenues Variable costs Fixed overhead Net Income B. Now assume that the Hall of Fame wants special hologram baseball cards. Hobby-Cardz will spend $5,900 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 $0.41 per pack
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