Question
SportsCards, Inc. manufactures basketball cards sold in packs of 10 in drugstores and grocery stores throughout the country. It is the second leading firm in
SportsCards, Inc. manufactures basketball cards sold in packs of 10 in drugstores and grocery stores throughout the country. It is the second leading firm in an industry with four major firms. SportsCards has been approached by Zip Cereal Inc., which would like to order a special edition of cards to use as a promotion with its new cereal. SportsCards would be solely responsible for designing and producing the cards. Zip wants to order 30,000 sets and has offered P25,500 for the total order. Each set will consist of 30 cards. SportsCards currently produces cards in sheets of 120.
Production Marketing and other cost (per sheet): | |
Direct Materials | 1.30 |
Direct Labor | 0.25 |
Variable Overhead | 0.45 |
Fixed Overhead | 0.20 |
Variable Marketing | 0.05 |
Fixed Marketing | 0.35 |
Insurance, taxes and administrative salaries | 0.10 |
Additional cost for the special order: | |
Design | 2,500 |
Other setup costs | 5,000 |
QUESTIONS:
1. The number of sheets to manufacture for the special order is (#1) _____________ sheets.
2, The total relevant cost of the special order is (#2) ________________.
3. Accepting the special order will (increase or decrease?) (#3) _______________ total operating income by (#4) __________________.
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