Variable costs: Direct materials 0.15 0.07 Direct labour Variable overhead 0.12 Fixed overhead..... PIXCUOVEITEaa. . . . . . . . . . . . . . . . . . . 0.26 0.60 Total cost .........................= Suppose the Hockey Hall of Fame in Toronto has approached Active-Cardz with a special order. The Hall of Fame wants to purchase 54,000 hockey card packs for a special promotional campaign and offers $0.45 per pack, a total of $24,300. Active-Cardz's total production cost is $0.60 per pack, as follows: (Click the icon to view the cost information.) Active-Cardz has enough excess capacity to handle the special order. Requirements 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. 2. Now assume that the Hall of Fame wants special hologram hockey cards. Active-Cardz must spend $2,200 to develop this hologram, which will be useless after the special order is completed. Should Active-Cardz accept the special order under these circumstances? Show your analysis 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 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 under these circumstances. Requirement 2. Now Yecial hologram hockey cards, Active-Cardz must spend $2.200 to develop this hologram, which will be Enter any number in accept the special sales order reject the special sales order he next question Requirement 2. Now assume that the Hall of Fame wants special hologram hockey cards. Active-Cardz must spend $2,200 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 under these circumstances. Enter any number in reject the special sales order he next question. accept the special sales order
