Accept Business at Special Price Product D is normally sold for $42 per unit. A

Question

Accept Business at Special Price Product D is normally sold for $42 per unit. A special price of $32 is offered for the export market. The variable production cost is $26 per unit. An additional export tariff of 11% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order. Prepare a differential analysis dated March 16, 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 "O". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) March 16 Differential Effect Reject Order Accept Order (Alternative 1) (Alternative 2) on Income (Alternative 2) Revenues, per unit 42 X 32 10 X Costs: Variable manufacturing costs, per unit 26 X 26 Export tariff, per unit 0 3.52 3.52X Income (Loss), per unit 16 X 13.52 X

Explanation / Answer

Reject order Accept order Differential effect Revenues per unit 0 32 32 Costs: Variable manufacturing costs,per unit 0 -26 -26 Export tariff, per unit 0 -3.52 -3.52 Income(loss) per unit 0 2.48 2.48

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