uppose the Hockey Hall of Fame in Toronto has approached Active-Cardz with a special order. The Hall of Fame wants to purchase 58,000 hockey card packs for a special promotional campaign and offers $0.39 perpack, a total of $22,620. Active-Cardz's total production cost is $0.53 perpack, asfollows:

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Active-Cardz has enough excess capacity to handle the special order.

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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.

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

DIRECT MATERIAL 0.12

DIRECT LABOUR 0.005

VARIABLE OVERHEAD 0.09

FIXED OVERHEAD 0.27

TOTAL COST 0.53