Question

Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable production cost is $5.00 per unit. An additional export tariff of 15% 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. Round your answers to two decimal places. If an amount is zero, enter "0". 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 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 $ $ $ Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?

Answer 1

a. By Differential Analysis

Accept Order or Reject Order

Per Unit: Accept Order Reject Order Differential effect on income

Revenue: $ 0 $7.20 $7.20

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