(L.OBJ. 2) Making special order and pricing decisions [10—15 min] Suppose the Baseball...

(L.OBJ. 2) Making special order and pricing decisions [10—15 min]

Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Active-Cardz with a special order. The Hall of Fame wishes to purchase 50,000 baseball card packs for a special promotional campaign and offers $0.37 per pack, a total of $18,500. Active-Cardz’s total production cost is $0.57 per pack, as follows:

Active-Cardz has enough excess capacity to handle the special order.

Requirements

1. Prepare an incremental analysis to determine whether Active-Cardz should accept the special sales order.

2. Now assume that the Hall of Fame wants special hologram baseball cards. Active-Cardz will spend $5,800 to develop this hologram, which will be useless after the special order is completed. Should Active-Cardz accept the special order under these circumstances?