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Question 2 (Special orders decision making) BallCards Inc. manufactures baseball cards sold in packs of 15 in pharmacies throughout the country. It is the third
Question 2 (Special orders decision making) BallCards Inc. manufactures baseball cards sold in packs of 15 in pharmacies throughout the country. It is the third leading firm in an industry with four major firms. BallCards has been approached by Pennock Cereal Inc., which would like to order a special edition of cards to use as a promotion with its cereal. BallCards would be solely responsible for designing and producing the cards. Pennock wants to order 25,000 sets and has offered $23,750 for the total order. Each set will consist of 33 cards. BallCards currently produces cards in sheets of 132. Production, marketing, and other costs (per sheet) Direct materials $1.20 Direct labor 0.20 Variable overhead 0.40 Fixed overhead 0.15 Variable marketing 0.10 Fixed marketing 0.35 Insurance, taxes, and administrative salaries 0.10 Costs for special order Design $2,000 Other setup costs 5,500 BallCards would incur no marketing costs for the special order. It has the capacity to accept this order without interrupting regular production
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