E25-10 Suppose the Baseball Hall of Fame in Cooperstown, New York, has approached Hobby-Cardz with

QUESTION

Suppose the Baseball Hall of Fame in Cooperstown, New York, has
approached Hobby-Cardz

E25-10 Making special pricing decisions

E25-10 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.

ANSWER:

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