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 51,000 baseball card packs for a special promotional campaign and offers $0.39 per pack, a total of $19,890. Hungry-Cardz's total production cost is $0.59 per pack, as follows: (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 Expected increase in expenses Variable manufacturing cost: packs x L Expected in operating income Decision: Requirement 2. Now assume that the Hall of Fame wants special hologram baseball cards. Hungry-Cardz will spend $5,900 to develop this hologram, which will be useless after the special order is completed. Should H the special order under these circumstances, assuming no change in the special pricing of $0.39 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 Variable costs: Direct materials Fixed manufacturing costs Direct labor 0.10 0.11 0.08 0.30 Expected increase in total expenses Variable overhead Fixed overhead Choose from any list or enter any number in the input fields and then continue to the next question. 0.59 Total cost point Com

Answer 1

Solution to requirement 1:-

Expected increase in revenue(51000 packs * $ 0.39)     $19890

Expected increase in Expenses

Variable Manufacturing Cost:

51000 packs* $0.29 $14790

Expected Increase in operating income $5100

Decision:-Hungry-Cardz should accept the special sales order as it will lead to additional operating income of $ 5100.

Solution to requirement 2:-

Expected increase in revenue(51000 packs * $ 0.39)     $19890

Expected increase in Expenses

Variable Manufacturing Cost:

51000 packs* $0.29 $14790

Additional Fixed Manufacturing Cost $5900

Expected Increase in Total Expenses $20690

Expected decrease in operating income    ($800)