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

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.