Question
Suppose the Hockey Hall of Fame in Toronto has approached Trader-Cardz with a special order. The Hall of Fame wants to purchase 56,000 hockey card
Suppose the Hockey Hall of Fame in Toronto has approached Trader-Cardz with a special order. The Hall of Fame wants to purchase 56,000 hockey card packs for a special promotional campaign and offers $0.47 per pack, a total of $26,320. Trader-Cardz's total production cost is $0.59 per pack, as follows: (Click the icon to view the cost information.) Trader-Cardz has enough excess capacity to handle the special order. Requirements Requirement 1. Prepare an incremental analysis to determine whether Trader-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.) Trader-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 Trader-Cardz should the special sales order because the operating income is expected to Requirement 2. Now assume that the Hall of Fame wants special hologram hockey cards. Trader-Cardz must spend $2,100 determine whether Trader-Cardz should accept the special order under these circumstances. (Use parentheses or a minus Cost information Variable costs: Direct materials Direct labour Variable overhead Fixed overhead. Total cost. Print Done 0.13 0.09 0.10 0.27 $ 0.59 order is completed. Prepare an incremental analysis Requirement 2. Now assume that the Hall of Fame wants special hologram hockey cards. Trader-Cardz must spend $2,100 to develop this hologram, which will be useless after the special order is completed. Prepare an incremental analysis to determine whether Trader-Cardz should accept the special order under these circumstances. (Use parentheses or a minus sign to enter a decrease in operating income.) Trader-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 Trader-Cardz should the special sales order under these circumstances because the operating income is expected to
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