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Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Sports - Cardz with a special order. The Hall of Fame wants to
Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Sports - Cardz with a special order. The Hall of Fame wants to purchase 58,000 baseball card packs for a special promotional campaign and offers $0.43 per pack, a total of $24,940. Sports - Cardz's total production cost is $0.63 per pack, as follows: (Click the icon to view the cost information.) Sports - Cardz has enough excess capacity to handle the special order. Read the requirements. Requirement 1. Prepare an incremental analysis to determine whether Sports - Cardz should accept the special sales order assuming fixed costs would not be affected by the special order. (Enter a "O" for any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.) Per Unit Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Total Order (58,000 units) 24,940 431 Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Decision: Requirement 2. Now assume that the Hall of Fame wants special hologram baseball cards. Sports - Cardz must spend $4,900 to develop this hologram, which will be useless after the special order is completed. Prepare an incremental analysis to determine whether Sports - Cardz should accept the special order under these circumstances. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.) Total Order (58,000 units) Incremental Analysis of Special Sales Order Decision Per Unit Revenue from special order 0 Data Table $ 0.14 Variable costs: Direct materials ........ Direct labar........... Variable, overhead........... 0.09 0.10 0.30 Fixed ovechead 0.63 Total.cost..... Print Done
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