Supposed the Football Hall of Fame in Canton, Ohio, has approached Special Design Cards with a special order. The Hall of Fame wishes to purchase 57,700 card packs for a special promotional campaign and offers $0.37 per pack. Special Design Cards total production cost is $0.48 per pack, as follows:Variable Costs:Direct Materials$0.11Direct Labor$0.02Variable overhead$0.11Fixed overhead$0.24Total Costs$0.48 Prepare a differential analysis to determine whether Special Design Cards should accept the special sales order.Special Design CardsExpected increase in revenue Expected increase in variable manufacturing costs Expected increase (decrease) in operating income Now assume that the Hall of Fame wants special hologram football cards. Special Design Cards will spend $4,970 to develop this hologram, which will be useless after the special order is completed. Should Special Design accept the special order under these circumstances, assuming no change in the special pricing of $0.37 per pack? Special Design CardsExpected increase in revenue Expected increase in variable manufacturing costs Expected increase in fixed manufacturing costs Expected increase (decrease) in operating income

Differential analysis is a method that determines difference in operating income from accepting or…

Answered: Supposed the Football Hall of Fame in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Supposed the Football Hall of Fame in Canton, Ohio, has approached Special Design Cards with a special order. The Hall of Fame wishes to purchase 57,700 card packs for a special promotional campaign and offers $0.37 per pack. Special Design Cards total production cost is $0.48 per pack, as follows:

Variable Costs:

Direct Materials	$0.11
Direct Labor	$0.02
Variable overhead	$0.11
Fixed overhead	$0.24
Total Costs	$0.48

Prepare a differential analysis to determine whether Special Design Cards should accept the special sales order.

Special Design Cards

Expected increase in revenue
Expected increase in variable manufacturing costs
Expected increase (decrease) in operating income

Now assume that the Hall of Fame wants special hologram football cards. Special Design Cards will spend $4,970 to develop this hologram, which will be useless after the special order is completed. Should Special Design accept the special order under these circumstances, assuming no change in the special pricing of $0.37 per pack?

Special Design Cards

Expected increase in revenue
Expected increase in variable manufacturing costs
Expected increase in fixed manufacturing costs
Expected increase (decrease) in operating income

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