Question
Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached TigerCardz with a special order. The Hall of Fame wishes to purchase 57,000
Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached
TigerCardz with a special order. The Hall of Fame wishes to purchase 57,000
baseball card packs for a special promotional campaign and offers $0.32
perpack, a total of $18,240.
Tiger- Cardzs total production cost is $0.52 per pack, as follows:
Data Table:
Variable costs:
Direct materials
$0.14
Direct labor
0.04
Variable overhead
0.09
Fixed overhead
0.25
Total cost
$0.52
Tiger-Cardz has enough excess capacity to handle the special order.
Requirements:
1. | Prepare a differential analysis to determine whether TigerCardz should accept the special sales order. |
2. | Now assume that the Hall of Fame wants special hologram baseball cards. TigerCardz will spend $5,500 to develop this hologram, which will be useless after the special order is completed. Should TigerCardz accept the special order under these circumstances, assuming no change in the special pricing of $0.32 per pack? |
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