Country Jeans Co. has an annual plant capacity of 65,800 units, and current production is 45,500 units. Monthly fixed costs are $40,100, and variable costs are $25 per unit. The present selling price is $33 per unit. On November 12 of the current year, the company received an offer from Miller Company for 16,500 units of the product at $29 each. Miller Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Country Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Miller order. If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Revenues Costs: Variable manufacturing costs Income (Loss) Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Feedback Reject Accept Order Order (Alternative 1) (Alternative 2) Differential Effect on Income (Alternative 2) Check My Work a. Subtract the additional costs from the additional revenues for accepting the order. to this decision. The differential revenue is more than the differential cost. Thus, accepting this additional b. Having unused capacity available is relevant business will result in a net gain c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Transcribed Image Text:Country Jeans Co. has an annual plant capacity of 65,800 units, and current production is 45,500 units. Monthly fixed costs are $40,100, and variable costs are $25 per unit. The present selling price is $33 per unit. On November 12 of the current year, the company received an offer from Miller Company for 16,500 units of the product at $29 each. Miller Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Country Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Miller order. If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Revenues Costs: Variable manufacturing costs Income (Loss) Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Feedback Reject Accept Order Order (Alternative 1) (Alternative 2) Differential Effect on Income (Alternative 2) Check My Work a. Subtract the additional costs from the additional revenues for accepting the order. to this decision. The differential revenue is more than the differential cost. Thus, accepting this additional b. Having unused capacity available is relevant business will result in a net gain c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.

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