Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Alley

Question

Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Alley- Cardz with a special order. Alley The Hall of Fame wishes to purchase 53,000 baseball card packs for a special promotional campaign and offers $0.45 per pack, a total of $23,850 Cardz's total production cost is $0.65 per pack, as follows: (Click the icon to view the cost information.) Alley Cardz has enough excess capacity to handle the special order Read the requirements. Requirement 1. Prepare a differential analysis to determine whether Alley Cardz should accept the special sales order. (Enter decreases to profits with a parentheses or minus sign.) $ 23,850 Expected increase in revenues Expected increase in expenses Variable manufacturing cost: 53,000 packs x 0.35 18,5 $ 5,300 Expected increase in operating income Decision: Accept the special sales order. Requirement 2. Now assume that the Hall of Fame wants special hologram baseball cards. Alley Cardz will spend $5,700 to develop this hologram, which will be useless after the special order is completed. Should Alley-C accept the special order under these circumstances, assuming no change in the special pricing of $0.45 per pack? Start by preparing the analysis with the additional cost for the special hologram. (Enter decreases to profits with a parentheses or minus sign.) Data Table Expected increase in revenues Expected increase in expenses: Variable manufacturing cost packs x Fixed manufacturing costs Variable costs: Direct materials Direct labor Variable overhead S 0.15 0.08 0.12 0.30 S 0.65 Expected increase in total expenses Expected in operating income Fixed overhead Total cost Print Done

Explanation / Answer

Requirement 1 answer is correct Requirement 2 Expected incraese in Revenue $23,850 Variable manufacturing cost 53000 packs X $.35 -18550 fixed manufacturing cost -5700 Expected Incraese in Total expenses -24250 Expected Decrease in operating income ($400) If any doubt please comment.

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