Question

Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Global Sports Cards with a special order. The Hall of Fame wishes to purchase 55,000 baseball card packs for a special promotional campaign and offers $ 0.39 per pack, a total of $ 21,450. Global Sports Cards’ total production cost is $ 0.59 per pack, as follows:
Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Global Sports Cards with a special order. The Hall of Fame wishes to purchase 55,000 baseball card packs for a special promotional campaign and offers $ 0.39 per pack, a total of $ 21,450. Global Sports Cards’ total production cost is $ 0.59 per pack, as follows:
Variable costs:
Direct materials........................................................................................... $ 0.13
Direct labor................................................................................................... 0.09
Variable overhead........................................................................................ 0.12
Fixed overhead............................................................................................... 0.25
Total cost...................................................................................................... $ 0.59
Global Sports Cards has enough excess capacity to handle the special order.

Requirements
1. Prepare an incremental analysis to determine whether Global Sports Cards 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 baseball cards. Global Sports Cards will spend $ 4,900 to develop this hologram, which will be useless after the special order is completed. Should Global Sports Cards accept the special order under these circumstances? Show your analysis.



$1.99
Sales2
Views87
Comments0
  • CreatedAugust 27, 2014
  • Files Included
Post your question
5000