Question

Jacoby Company received an offer from an exporter for 30,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Domestic unit sales price $21
Unit manufacturing costs: Variable 12 Fixed 5
What is the differential revenue from the acceptance of the offer?
a. $630,000
b. $120,000
c. $510,000
d. $450,000

Answer 1

The differential revenue from the offer for Jacoby Company is $450,000, which is derived by multiplying 30,000 units by the offered price of $15 per unit. The correct option is (d).

Step-by-step explanation:

The differential revenue from accepting the offer from an exporter for Jacoby Company is calculated by subtracting the domestic sales revenue from the revenue generated from the exporter's offer.

Since the offer will not affect normal production or domestic sales prices, we calculate the differential revenue as follows: 30,000 units times $15 per unit equals $450,000. Therefore, the acceptance of the offer will generate $450,000 in differential revenue, which corresponds to option d in the multiple-choice question provided.

Answer 2

The correct option here is D) $450,000.

Step-by-step explanation:

The differential revenue from the acceptance offer is the additional amount of revenue that will be generated without affecting the revenue generated from the domestic sales in the normal course of operations.

The differential revenue from acceptance of offer can be calculated as -

= Selling price per unit per offer x number of units per offer

= $15 x 30,000

= $450,000

Therefore $450,000 is the differential revenue from the acceptance of offer.