Accept Business at Special Price Product D is normally sold for $47 per unit. A

Question

Accept Business at Special Price

Product D is normally sold for $47 per unit. A special price of $32 is offered for the export market. The variable production cost is $23 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.

Prepare a differential analysis dated July 7, on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter zero "0".

Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?

Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) July 7 Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per unit $ $ $ Costs: Variable manufacturing costs, per unit Export tariff, per unit Income (Loss), per unit $ $ $

Explanation / Answer

Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) 7-Jul Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per unit 0 32 32 Costs: Variable manufacturing costs, per unit 0 -23 -23 Export tariff, per unit 0 -4.8 -4.8 Income (Loss), per unit 0 4.2 4.2 The special order be accepted

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