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Accept Business at Special Price
Product A is normally sold for $49 per unit. A special price of $31 is offered for the export market. The variable production cost is $22 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 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 "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 | $fill in the blank ff686a03d067fb0_1 | $fill in the blank ff686a03d067fb0_2 | $fill in the blank ff686a03d067fb0_3 |
Costs: | |||
Variable |
fill in the blank ff686a03d067fb0_4 | fill in the blank ff686a03d067fb0_5 | fill in the blank ff686a03d067fb0_6 |
Export tariff, per unit | fill in the blank ff686a03d067fb0_7 | fill in the blank ff686a03d067fb0_8 | fill in the blank ff686a03d067fb0_9 |
Income (Loss), per unit | $fill in the blank ff686a03d067fb0_10 | $fill in the blank ff686a03d067fb0_11 | $fill in the blank ff686a03d067fb0_12 |
b. Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
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