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Homework answers / question archive / From Accept Business at Special Price Product A is normally sold for $50 per unit
From Accept Business at Special Price Product A is normally sold for $50 per unit. A special price of $31 is offered for the export market. The variable production cost is $25 per unit. An additional export tariff of 12% 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 "o". Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) March 16 Reject Accept Differential Order Order Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues, per unit Costs: Variable manufacturing costs, per unit Export tariff, per unit Profit (loss), per unit b. Should the special order be rejected (Alternative 1) or accepted (Alternative 2)? Accept the special order Reject the special order
Requirement a:
Differential Analysis
Reject Order (Alt. 1) or Accept Order (Alt. 2)
March 16
| Particulars | Reject Order (Alternative 1) | Accept Order (Alternative 2) | Differential Effect on Income (Alternative 2) |
| Revenues, per unit | $0.00 | $31.00 | $31.00 |
| Costs: | |||
| Variable manufacturing costs, per unit | 0.00 | -25.00 | -25.00 |
| Export tariff, per unit | 0.00 | -3.72 | -3.72 |
| Income (Loss), per unit | $0.00 | $2.28 | $2.28 |
Working notes:
Export tariff, per unit = $31.00 * 12% = $3.72
Requirement b:
The company should accept the special order.
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