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Suppose the Hockey Hall of Fame in Toronto has approached Active-Cardz with a special order. The Hall of Fame wants to purchase 63,000 hockey card
Suppose the Hockey Hall of Fame in Toronto has approached Active-Cardz with a special order. The Hall of Fame wants to purchase 63,000 hockey card packs for a special promotional campaign and offers $0.44 per pack, a total of $27,720. Active-Cardz's total production cost is $0.54 per pack, as follows: (Click the icon to view the cost information.) Active-Cardz has enough excess capacity to handle the special order. Requirements Requirement 1. Prepare an incremental analysis to determine whether Active-Cardz should accept the special sales order assuming fixed costs would not be affected by the special order. (Use parentheses or a minus sign to enter a decrease in operating income.) Active-Cardz Incremental Analysis of Special Sales Order Cost information Expected increase in revenues Expected increase in expenses: Variable manufacturing costs Variable costs: Fixed manufacturing costs Direct materials $ 0.12 Direct labour 0.08 Total expected increase in expenses Variable overhead 0.13 Expected increase (decrease) in operating income Fixed overhead 0.21 Active-Cardz should the special sales order because the operating income is expected to Total cost $ 0.54 Requirement 2. Now assume that the Hall of Fame wants special hologram hockey cards. Active-Cardz must spend $2,6 Prepare an incremental analysis to determine whether Active-Cardz should accept the special order under these circumst operating income.) Print DoneRequirement 2. Now assume that the Hall of Fame wants special hologram hockey cards. Active-Cardz must spend $2,600 to develop this hologram, which will be useless after the special order is completed. Prepare an incremental analysis to determine whether Active-Cardz should accept the special order under these circumstances. (Use parentheses or a minus sign to enter a decrease in operating income.) Active-Cardz Incremental Analysis of Special Sales Order Expected increase in revenues Expected increase in expenses: Variable manufacturing costs Fixed manufacturing costs Total expected increase in expenses Expected increase (decrease) in operating income Active-Cardz should the special sales order under these circumstances because the operating income is expected to X Cost information Variable costs: Direct materials . $ 0.12 Direct labour 0.08 Variable overhead ... . ... . 0.13 Fixed overhead 0.21 $ 0.54 Total cost
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