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Problem #1. Making special pricing decisions_Hall of Fame in Cooperstown

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Question;Problem;#1. Making special pricing decisions;Suppose;the Baseball Hall of Fame in Cooperstown, New York, has approached Hobby-Cardz;with a special order. The Hall of Fame wishes to purchase 57,000 baseball card;packs for a special promotional campaign and offers $0.41 per pack, a total of;$23,370. Hobby-Cardz?s total production cost is $0.61 per pack, as follows;Variable costs;Direct materials $ 0.13;Direct labor 0.06;Variable overhead 0.12;Fixed overhead 0.30;Total cost $ 0.61;Hobby-Cardz;has enough excess capacity to handle the special order.;Requirements;1.;Prepare a differential analysis to determine whether Hobby-Cardz should accept the;special sales order.;2.;Now assume that the Hall of Fame wants special hologram baseball cards. Hobby-Cardz;will spend $5,900 to develop this hologram, which will be useless after the;special order is completed. Should Hobby-Cardz accept the special order under;these circumstances, assuming no change in the special pricing of $0.41 per;pack?

 

Paper#37457 | Written in 18-Jul-2015

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