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Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Hobby-Cardz with a special order. The Hall of Fame wants to purchase
Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Hobby-Cardz with a special order. The Hall of Fame wants to purchase 54,000 baseball card packs for a special promotional campaign and offers $0.34 per pack, a total of $18,360. Hobby-Cardz's total production cost is $0.54 per pack, as follows: (Click the icon to view the cost information.) Hobby-Cardz has enough excess capacity to handle the special order. Read the requirements. Requirement 1. Prepare an incremental analysis to determine whether Hobby-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.) Incremental Analysis of Special Sales Order Decision Per Unit Total Order (54,000 units) Revenue from special order 0.34 5 18,360 Less variable expense associated with the order. Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order: 10800 14 7560 0 7650
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