Question

Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Hungry - Cardz with a special order. The Hall of Fame wishes to purchase 55,000 baseball card packs for a special promotional campaign and offers $0.33 per pack, a total of $18,150. Hungry - Cardz's total production cost is $0.53 per pack, as follows: E (Click the icon to view the cost information.) Hungry - Cardz has enough excess capacity to handle the special order. Read the requirements. Requirement 1. Prepare a differential analysis to determine whether Hungry - Cardz should accept the special sales order. (Enter decreases to profits with a parentheses or minus sign.) Expected increase in revenues Data Table Expected increase in expenses Requirements Variable manufacturing cost: packs x Variable costs: 1. Prepare a differential analysis to determine whether Hungry - Cardz should accept the special sales order. in operating income Expected Direct materials 0.13 2. Now assume that the Hall of Fame wants special hologram baseball cards. Hungry - Cardz will spend $5,000 to develop this hologram, which will be useless after the special order is completed. Should Hungry - Cardz accept the special order under these circumstances, assuming no change in the special pricing of $0.33 per pack? Direct labor 0.04 Variable overhead 0.11 0.25 Fixed overhead 0.53 Total cost Print Done Print Choose from any list or enter any number in the input fields and then click Check Answer. Done

Answer 1

solution Given that also autorento stop 1) Excess capacity of production shall not consider the fixed as it is not relevant cost as it is a sunk cost. I b osc Sales Poile per unit > $0-33 Less: Direct material = $-013 Direct laboo-$0.00 vasiable over head = $0.11 Differenciar amount pes cenit> $0.05 Onits sold = 55,000 Differencias income $ 2750 Differential Analysis : Differential analysis gefers to the method pertaining to which two or more alternative of basiness are compared with each other in oodes to select the best alternative amongst the two of business takes into consideration comparison of only relevant cost of the underlying alternatives and the benefits of the same howeved cost already incurred pertainining

to the alternative are igrooed. 2) the amount spent on development of hdogsam to be reased is not relevant cost for decision making. Hence the differencial devenue gemcerns the same of $2750. shall be still sola.