Question

Ch 25-4

Score: 0 of 5 pts 4 of 5 (0 complete) HW Score: 0%, 0 of 36 pts E25-10 (similar to) Question Help Suppose the Baseball Hall of Fame in Cooperstown New York, has approached Wantum-Cardz with a special order The Hall of Eame wishes to purchase Wantun-Cardz's fotal production cost is $0 62 per pack, as follows 56 000 baseball card packs for a special promotionalE (Click the icon to view the cost information) campaign and offers S0.42 per pack, a total of $23 520 Wantum Cardz has enough excess capacity to handle the special order Read the reauI Requirement 1. Prepare a differential analysis to determine whether Wanturn-Cardz should accept the special sales order (Enter decreases to profits with a parentheses or minuS Sign similar te Expected increase in revenues Expected increase in expenses Vaniable manufacturing cost packs x Expected noperating income

Answer 1

1.Since there is spare capacity, no additional fixed cost will be incurred for the purpose of special order

Expected Increase in Revenues = 23,520

Expected Increase in Expenses

Variable manufacturing cost

56,000 packs*(0.14+0.10+0.13)= $20,720

Expected Increase in Operating Income = $2,800

Should ACCEPT

2.Expected increase in operating income = 2,800-5,100 = -$2,300

i.e. decrease

Hence, should not accept