FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
6
Accept Business at Special Price
A product is normally sold for $45 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 15% of revenue must be paid for all export products. Assume
there is sufficient capacity for the special order.
a. Prepare a differential analysis dated December 15 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 "0".
Differential Analysis
Reject (Alt. 1) or Accept (Alt. 2) Order
December 15
>
Line Item Description
Revenues, per unit
Costs:
Variable manufacturing costs,
per unit
Export tariff, per unit
Profit (loss), per unit
Reject
Accept
Order
Order
(Alternative (Alternative
1)
2)
000
Differential
Effects
(Alternative
2)
000
b. Should the special order be rejected (Alternative 1) or accepted (Alternative
2)?
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Transcribed Image Text:Accept Business at Special Price A product is normally sold for $45 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 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order. a. Prepare a differential analysis dated December 15 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 "0". Differential Analysis Reject (Alt. 1) or Accept (Alt. 2) Order December 15 > Line Item Description Revenues, per unit Costs: Variable manufacturing costs, per unit Export tariff, per unit Profit (loss), per unit Reject Accept Order Order (Alternative (Alternative 1) 2) 000 Differential Effects (Alternative 2) 000 b. Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
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