EXERCISE 24-1 Accepting Or Rejecting a Special Sales Order

EXERCISE 24-1 Accepting or rejecting a special sales order

Suppose the Football Hall of Fame in Sydney, has approached Sports-Cardz Ltd with a special order. The Hall of Fame wishes to purchase 100,000 football card packs for a special promotional campaign and offers $0.95 per pack, a total of $95,000. Sports-Cardz total production cost is $1.25 per pack as follows:

Variable costs: Direct materials...... $0.20 Direct labor...... 0.14 Variable overhead...... 0.41 Fixed overhead...... 0.50 Total cost...... $1.25

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

Required:

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

2. Now assume that the Hall of Fame wants special hologram football cards. Sports-Cardz will spend $35,000 to develop this hologram, which will be useless after the special order is completed. Should Sports-Cardz accept the special order under these circumstances?

Instructions:

1. Review the printed template called Exercise 24-1 that follows these instructions. Most of the problem data have been entered for you in the data input section of the spreadsheet.

Enter the amounts where indicated.

2. There are 8 FORMULAS in the template that you need to provide to complete your analysis. Using the spaces provided below, write the formulas where requested in the template.

FORMULA 1 ______FORMULA 5 ______

3. Click the Excel icon from the program manager screen to start the spreadsheet program. Click on Open File to retrieve the template for the problem. Enter the missing amounts in the appropriate cells on the template. Then enter the 8 FORMULAS where indicated on the template.

EXERCISE 24-1 Continued

Type the answer where indicated.

4. Click the Save File Button to save your work.

5. Click the Print Button to print your work.