Managerial Accounting: E25-10 Suppose the Baseball Hall of Fame in Cooperstown, New York

Managerial Accounting
E25-10 Making special pricing decisions
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 promotion campaign and offers $.33 per pack, a total of $18,150. Hungry-Cardz's production cost is $0.53 per pack, as follows:
Variable Costs:
Direct materials 0.13
Direct Labor 0.04
Variable overhead 0.11
Fixed overhead 0.25
Total cost $0.53
Hungry-Cardz had enough excess capacity to handle the special order

1. Prepare a differential analysis to determine whether Hungry-Cardz should accept the special sales order.
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 Hugnry-Cardz accept the special order under these circumstances, assuming no change in the special pricing of $0.33 per pack?
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