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Suppose the Hockey Hall of Fame in Toronto has approached Collectible-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 Collectible-Cardz with a special order. The Hall of Fame wants to purchase 63,000 hockey card packs for a special promotional campaign and offers $0.49 per pack, a total of $30,870. Collectible-Cardz's total production cost is $0.63 per pack, as follows: :(Click the icon to view the cost information.) Collectible-Cardz has enough excess capacity to handle the special order. - X Cost information Requirements Requirement 1. Prepare an incremental analysis to determine whether Collectible-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.) Variable costs Direct materials . . ............ 0.16 Collectible-Cardz Direct labour 0.09 Incremental Analysis of Special Sales Order Variable overhead ... .. ...... 0.13 Expected increase in revenues 0.25 Expected increase in expenses: Fixed overhead . . . . . . . 0.63 Variable manufacturing costs Total cost $ Fixed manufacturing costs Total expected increase in expenses Print Done Expected increase (decrease) in operating income Collectible-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. Collectible-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 Collectible-Cardz should accept the special order under these circumstances. (Use parentheses or a minus sign to enter a decrease in operating income.) Collectible-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 Collectible-Cardz should the special sales order under these circumstances because the operating income is expected to V
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