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Suppose the Baseball Hall of Fame in Cooperstown,

New York, has approached Hobby $-$ Cardz with a special

order. The Hall of Fame wants to purchase $59,000$

baseball card packs for a special promotional campaign

and offers $$0\mathrm{.}40$ per pack, a total of $$23,600.$

Hobby $-$ Cardz's total production cost is $$0\mathrm{.}60$

per pack, as follows:

$($Click the icon to view the

cost information.$)$

Hobby $-$ Cardz has enough excess capacity to

handle the special order.

Requirement $1.$ Prepare an incremental analysis to determine whether Hobby $-$ Cardz should accept the special

sales order assuming fixed costs would not be affected by the special order. $($Enter a $"0"$ for any zero balances. Use

parentheses or a minus sign to indicate a decrease in operating income from the special order.$)$

Total Order

Incremental Analysis of Special Sales Order Decision

Revenue from special order

Less variable expense associated with the order:

Variable manufacturing costs

Contribution margin

Less: Additional fixed expenses associated with the order

Increase $($decrease$)$ in operating income from the special order

Requirements

Prepare an incremental analysis to determine whether Hobby $-$ Cardz should

accept the special sales order assuming fixed costs would not be affected by

the special order.

Now assume that the Hall of Fame wants special hologram baseball cards.

Hobby $-$ Cardz must spend $$4,700$ to develop this hologram, which will be

useless after the special order is completed. Should Hobby $-$ Cardz accept the

special order under these circumstances? Show your analysis.

Data table

Variable costs:

Direct materials $...............$ $ $0\mathrm{.}12$

Direct labor $.....................,0\mathrm{.}07$

Variable overhead $............0\mathrm{.}11$

Fixed overhead. $....................0\mathrm{.}30$

Total cost. $.......................$ $ $19$

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