Determine whether hobby-cardz should accept special sales

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Reference no: EM13215742

Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Hobby-Cardz with a special order. The Hall of Fame wishes to purchase 57,000 baseball card packs for a special promotional campaign and offers $0.41 per pack, a total of $23,370. Hobby-Cardz's total production cost is $0.61 per pack, as follows:
Variable costs:
Direct materials $ 0.13
Direct labor 0.06
Variable overhead 0.12
Fixed overhead 0.30
Total cost $ 0.61
Hobby-Cardz has enough excess capacity to handle the special order.
Requirements
1. Prepare a differential analysis to determine whether Hobby-Cardz should accept the special sales order.
2. Now assume that the Hall of Fame wants special hologram baseball cards. Hobby-Cardz will spend $5,900 to develop this hologram, which will be useless after the special order is completed. Should Hobby-Cardz accept the special order under these circumstances, assuming no change in the special pricing of $0.41 per pack?

Reference no: EM13215742

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