Suppose the Hockey Hall of Fame in Toronto has approached

Rec-Cardz

with a special order. The Hall of Fame wants to purchase

57,000

hockey card packs for a special promotional campaign and offers

$0.40

per pack, a total of

$22,800.

Rec-Cardz's

total production cost is

$0.54

per pack, as follows:

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(Click the icon to view the cost information.)

Rec-Cardz

has enough excess capacity to handle the special order.Requirements

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Requirement 1. Prepare an incremental analysis to determine whether

Rec-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.)

Rec-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

Variable costs:
Direct materials. . . . . . . . . . . . . .	$0.13
Direct labour. . . . . . . . . . . . . . . . .	0.07
Variable overhead. . . . . . . . . . .	0.12
Fixed overhead. . . . . . . . . . . . . . . . . .	0.22
Total cost. . . . . . . . . . . . . . . . . . . . . .	$0.54