Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached International Cards with a special order. The Hall of Fame wants to purchase 56,000 baseball card packs for a special promotional campaign and offers $0.43 per pack, a total of $24,080. International Cards's total production cost is $0.63 per pack, as follows: (Click the icon to view the cost information.) International Cards has enough excess capacity to handle the special order. Read the requirements. ..... Requirement 1. Prepare an incremental analysis to determine whether International Cards should accept the special sales order assuming fixed costs would not be affected by the special order. (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 Incremental Analysis of Special Sales Order Decision Per Unit (56,000 units) Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin MI Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Decision: Data table Requirements Use Variable costs: 0.13 0.08 Direct materials Direct labor Variable overhead Fixed overhead 1. Prepare an incremental analysis to determine whether International Cards should accept the special sales order assuming fixed costs would not be affected by the special order. 2. Now assume that the Hall of Fame wants special hologram baseball cards. International Cards must spend $5,000 to develop this hologram, which will be useless after the special order is completed. Should International Cards accept the special order under these circumstances? Show your analysis. 0.12 0.30 $ 0.63 Total cost Print Done Print Done 5,000 to develop this hologram, which will be useless after the special order is completed. Prepare an increm any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the spe Requirement 2. Now assume that the Hall of Fame wants special hologram baseball cards. International Cards must spend $5,000 to develop this hologram, which will be useless after the special order is completed. Prepare an incremental analysis to determine whether International Cards 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 Per Unit (56,000 units) Incremental Analysis of Special Sales Order Decision Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin III Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Decision
