Question
Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached SportsCardz with a special order. The Hall of Fame wishes to purchase 50,000
Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached SportsCardz with a special order. The Hall of Fame wishes to purchase 50,000 baseball card packs for a special promotional campaign and offers $0.47 per pack, a total of $23,500.
SportsCardz's total production cost is $0.67 per pack, asfollows:
Variable costs:
Direct materials
$0.16
Direct labor
0.09
Variable overhead
0.12
Fixed overhead
0.30
Total cost
$0.67
Requirements
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1. | Prepare a differential analysis to determine whether SportsCardz should accept the special sales order. |
2. | Now assume that the Hall of Fame wants special hologram baseball cards. SportsCardz will spend $5,600 to develop thishologram, which will be useless after the special order is completed. Should SportsCardz accept the special order under these circumstances, assuming no change in the special pricing of $0.47 per pack? |
Requirement 1. Prepare a differential analysis to determine whether SportsCardz should accept the special sales order. (Enter decreases to profits with a parentheses or minus sign.)
Expected increase in revenues | ||||||||
Expected increase in expenses | ||||||||
Variable manufacturing cost: | ||||||||
packs | ||||||||
Expected | in operating income |
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